/raid1/www/Hosts/bankrupt/TCR_Public/090305.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, March 5, 2009, Vol. 13, No. 63
Headlines
82A DEVELOPMENTS: Case Summary & Largest Unsecured Creditor
ADVANCED MICRO: Closes Deal to Spin Off Chip Facilities
ADVANCED MICRO: Bruce Claflin Appointed as Board Chairman
ADVANTAGE RENT-A-CAR: Enterprise Signs Deal to Acquire Assets
ALFRED CARR: Voluntary Chapter 11 Case Summary
ALLIANT TECHSYSTEMS: Moody's Keeps 'Ba3' Corporate Family Rating
AMBAC ASSURANCE: Moody's Reviews Insurance Strength Ratings
AMERICAN CAPITAL: S&P Cuts Counterparty Credit Rating to 'BB-'
AMERICAN GREETINGS: S&P Keeps Neg. Watch on BB+ After RPG Purchase
AMERICAN INT'L: Former Gen Re Executive Imprisoned Due to Fraud
ANIXTER INC: Moody's Assigns 'Ba2' Rating on $200 Mil. 2014 Notes
APEX SILVER: Court Confirms Joint Chapter 11 Plan
ARBY'S RESTAURANT: Moody's Affirms 'B2' Ratings on Wendy's Merger
ATLAS PIPELINE: Cut by S&P to 'B', More Cuts Absent Asset Sales
AUTOBACS STRAUSS: Gets Interim Approval to Access $20MM DIP Loan
AVIS BUDGET: Moody's Downgrades Ratings on 5 Asset Backed Notes
BAKER & TAYLOR: S&P Downgrades Ratings to "B-" on Sales Drop
BANK OF AMERICA: Deutsche Sued for Luring Merrill's Bankers
BANK OF AMERICA: S&P Cuts Long-Term Counterparty Credit Rating
BEARINGPOINT INC: Still Entertaining Offers for Assets
BEARINGPOINT INC: Terms of Amended Plan & Disclosure Statement
BEARINGPOINT INC: U.S. Trustee Forms Seven-Member Creditors Panel
BEARINGPOINT INC: Wants to Hire Allen & Overy as Special Counsel
BEAZER HOMES: S&P Lowers Credit Rating to CCC+/Negative
BELO CORPORATION: Fitch Downgrades Issuer Default Rating to 'BB-'
BERNARD L. MADOFF: Fairfield Sues KPMG Over Madoff Losses
BERNARD L. MADOFF: UK Unit Sent $164-Mil. to Parent in November
BETTER BEDDING: Files for Chapter 11 Bankruptcy, Closes 11 Stores
BIOPURE CORPORATION: Cash to Last Into April; Mulls Options
BOYD GAMING: Fitch Downgrades Issuer Default Rating to 'B+'
BRIAN TUTTLE: Exclusive Plan Filing Period Extended to June 12
BROADSTRIPE LLC: Files Schedules of Assets and Liabilities
BULLION RIVER: Files Chapter 11 Petition in Sacramento
CALDWELL ACQUISITIONS I: Voluntary Chapter 11 Case Summary
CAPMARK FINANCE: Fitch Downgrades Servicer Ratings on Three CMBS
CARAUSTAR INDUSTRIES: Moody's Cuts Corp. Family Rating to 'Caa2'
CHEVY CHASE: Moody's Upgrades Long-Term Deposit and Debt Ratings
CHRISTIAN KNUDSEN: Voluntary Chapter 11 Case Summary
CHRYSLER LLC: Retail Sales Dropped 26% to 66,658 Units in February
CITIGROUP INC: Launches Program to Let Jobless Pay Less
CONSECO INC: Fitch Downgrades Issuer Default Rating to 'B+'
CONSECO INC: Moody's Downgrades Insurance Strength Rating to Ba2
CONTINENTALAFA DISPENSING: Panel Taps RubinBrown as Fin'l Advisors
COUNTRYWIDE FINANCIAL: Loan to Former Fannie Mae CEO Questioned
CREST 2002-IG: Fitch Downgrades Ratings on Class D Notes to 'B+'
DEVELOPMENTAL LEARNING: Voluntary Chapter 11 Case Summary
DOLE FOOD: Moody's Assigns 'B3' Rating on Proposed $325MM Bonds
ENTERPRISE RENT-A-CAR: Will Acquire Advantage's Assets for $19MM
EVERYTHING BUT WATER: Voluntary Chapter 11 Case Summary
EXTRA ROOM: Case Summary & 20 Largest Unsecured Creditors
FANNIE MAE: Countrywide's Loan to Franklin Raines Questioned
FEDERAL FREIGHT: Voluntary Chapter 11 Case Summary
FOOTHILLS RESOURCES: $2.5-Mil. DIP Loan From Regiment Approved
FORD MOTOR: Moody's Takes Rating Actions on Six Auto Loan Deals
FORD MOTOR: Launches Restructuring Plan; To Cut $10.4BB in Debt
FORD MOTOR CREDIT: Offers to Buy Back Debt Securities, Term Loan
FULLMER CATTLE: Voluntary Chapter 11 Case Summary
GE CAPITAL: Credit Default Swaps Increase 4x Since May 2008
GRAFTECH INTERNATIONAL: Moody's Downgrades Liquidity Rating
GREGORY FOREST: Voluntary Chapter 11 Case Summary
GTS PROPERTY: Case Summary & Largest Unsecured Creditor
HIGH COUNTRY DEVELOPMENTS: Voluntary Chapter 11 Case Summary
ICP D200: Voluntary Chapter 11 Case Summary
INNOVATIVE COMM: Virgin Islands Property Sold for $800,000
INTEGRA BANK: Moody's Confirms D+ Bank Financial Strength Rating
ISTAR FINANCIAL: Fitch Downgrades Issuer Default Rating to 'B-'
JEVIC TRANSPORTATION: Creditors May Sue Owner Sun Capital
LAUREATE EDUCATION: S&P Affirms Corporate Credit Rating at 'B'
LCM VII: Fitch Downgrades Ratings on Seven Classes of Notes
LEHMAN BROTHERS: PwC to Ask London Court to Rule on Trust Assets
M TANGREDI: Will Liquidate Nashville Restaurants to Pay Debts
MANITOWOC CO: S&P Changes Outlook to Negative; Keeps 'BB' Rating
MEMBER BENEFITS: Files for Bankruptcy, Will Shut Down
METHODIST HOSPITALS: Moody's Keeps 'Ba3' Rating on $72.6MM Debt
MIDWAY GAMES: May Sell Mortal Kombat Franchise
MORTGAGES LTD: Rivals Investors' Chapter 11 Plan
NEIMAN MARCUS: Fitch Affirms Issuer Default Rating at 'B'
NEVEL PROPERTIES: Files for Chapter 11 Bankruptcy Protection
NGPL PIPECO: Fitch Affirms Senior Unsecured Debt Ratings
NORTEL NETWORKS: Hopes to Emerge from Bankruptcy Mid Year
NRG ENERGY: Reliant Energy Deal Cues Fitch to Hold 'B' Rating
PLAINS EXPLORATION: Moody's Assigns 'B1' Rating on $500MM Notes
PHILLY NEWSPAPERS: To Probe Lenders' Taping of Private Meeting
PLAINS EXPLORATION: S&P Affirms 'BB' Corporate Credit Rating
PRECISION PARTS: Panel Wants Proskauer Rose as Special Counsel
PRECISION PARTS: Panel Taps NachmanHaysBrownstein as Advisors
PRECISION PARTS: Court OKs Rothschild Inc. as Investment Banker
PRECISION PARTS: Court Approves Stevens & Lee as Co-Counsel
PROPEX INC: BNP Balks at Wayzata APA; Wants Credit Bidding Allowed
QIMONDA N.A.: Court Approves Epiq Bankruptcy as Claims Agent
QIMONDA N.A.: Section 341(a) Meeting Slated for March 27
QIMONDA N.A.: Wants Schedules Filing Deadline Moved to May 21
RADIO ONE: S&P Downgrades Corporate Credit Rating to 'B-'
RADIO SYSTEMS: S&P Changes Outlook to Negative; Keeps 'B' Rating
READER'S DIGEST: Hires Kirkland to Mull Bankruptcy, Other Options
RIGHT START: Authorized by Court to Conduct GOB Sales
RITZ CAMERA: Can Hire KCC as Official Claims and Noticing Agents
RIVENDELL LOAN: Fitch Downgrades Ratings on Two Classes of Notes
RONALD COLLINS: Case Summary & 15 Largest Unsecured Creditors
SAKS INC: To Tap Real-Estate Assets When in Need of More Cash
SAKS INCORPORATED: Fitch Downgrades Issuer Default Rating to 'B-'
SCOTTS MIRACLE-GRO: S&P Downgrades Ratings to 'BB-' from 'BB'
SENSATA TECHNOLOGIES: S&P Cuts Corporate Credit Rating to 'CC'
SJ LAND: Asks Court Approve to Term Extension to Loan Agreement
SOLUTIA INC: S&P Downgrades Corporate Credit Rating to 'B'
SPANSION INC: Seeks Permission to Use Lenders' Cash Collateral
SPANSION INC: Seeks to Hire Latham & Watkins as Counsel
SPANSION INC: Seeks to Hire Baker & McKenzie as Special Counsel
SPANSION INC: Seeks to tap Gordian as Financial Advisors
SPANSION LLC: S&P Corrects Issue Level Ratings on Notes to 'D'
STATION CASINOS: Plan Proposal Delayed or Blocked, Says Rochelle
STATION CASINOS: S&P Downgrades Senior Notes Rating to 'D'
STADIUM HOLDINGS: Voluntary Chapter 11 Case Summary
SUMMIT LOGISTICS: Files for Bankruptcy to Reorganize
SUNGARD DATA: Fitch Downgrades Issuer Default Rating to 'B'
SYNTAX-BRILLIAN: Under Investigation by U.S. Authorities
TENET HEALTHCARE: Fitch Assigns 'BB-' Rating on 2015 Senior Notes
TNS INC: S&P Affirms Corporate Credit Rating to 'BB-'
TRIAXX FUNDING: Supplemental Indenture Won't Affect Moody's Rtng.
TRIBUNE CO: Scripps May Buy Food Network Stake This Year
TROPICANA ENTERTAINMENT: Opco Debtors Amended Bankruptcy Plan
TROPICANA ENTERTAINMENT: LandCo Debtors Amend Bankruptcy Plan
TROPICANA ENTERTAINMENT: Disclosure Statement Hearing Today
TROPICANA ENTERTAINMENT: Wants Solicitation Deadline Moved to July
TRUMP INT'L: Lenders & Developer Agree to Temporarily Stop Suit
VALHI INC: Fitch Junks Issuer Default Rating from 'B-'
VERASUN ENERGY: Seeks June 30 Extension of Plan Filing Deadline
VERASUN ENERGY: Seeks May 29 Extension of Lease Decision Period
VERASUN ENERGY: Has Until Tomorrow to Pick Bidder for Other Assets
VERSACOLD INTERNATIONAL: Moody's Cuts Default Rating to 'Caa3'
VILLAGE HOMES: Wants Plan Filing Deadline Extended to July 3
VIRGIN MOBILE: Posts $4.4 Million Fourth Quarter 2008 Net Loss
W.R. GRACE: Credit Crisis May Delay $1-Bil. Bankruptcy Exit Loan
W&T OFFSHORE: Moody's Downgrades Corporate Family Rating to 'B3'
WENDY'S INTERNATIONAL: Moody's Reviews B1 Ratings on Arby's Deal
WHITNEY LAKE: Can Employ Krawcheck Law Firm as Special Counsel
WHITNEY LAKE: U.S. Trustee Wants Plan Outline Scrapped
WL HOMES: Can Hire Omni Management as Claims and Noticing Agent
WL HOMES: Wants Bradley D. Sharp as Chief Restructuring Officer
WOOD STRUCTURE: Voluntary Chapter 11 Case Summary
WORKFLOW MANAGEMENT: Moody's Affirms at Caa3 in Corrected Release
* Bankruptcy Filings Surged 37% in February Over Prior Year
* Pending Home Sales Down but Housing Affordability at Record
* NewOak Capital Appoints Candice Nonas Managing Director
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
*********
82A DEVELOPMENTS: Case Summary & Largest Unsecured Creditor
-----------------------------------------------------------
Debtor: 82A Developments, LLC
312 E. First Street, Ste 320
Los Angeles, CA 90012
Bankruptcy Case No.: 09- 14704
Type of Business: The Debtor is a land developer.
Chapter 11 Petition Date: March 2, 2009
Court: Central District Of California (Los Angeles)
Judge: Barry Russell
Debtor's Counsel: Joseph L. Pittera, Esq.
Law Offices of Joseph L. Pittera
2214 Torrance Blvd., Ste. 101
Torrance, CA 90501
Tel: (310) 328-3588
Fax: (310) 328-3063
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's List of Largest Unsecured Creditors only contained a
lone party:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Winefield Associates Inc. trade debt $68,000
110 Pine Avenue, Ste. 900
Long Beach, CA 90802
The petition was signed by J.C. Yeh, managing member.
ADVANCED MICRO: Closes Deal to Spin Off Chip Facilities
-------------------------------------------------------
Kathy Shwiff at The Wall Street Journal reports that Advanced
Micro Devices Inc. has closed a deal that will let it spin off its
chip manufacturing facilities into a joint venture with Abu Dhabi.
The joint venture was temporarily called The Foundry Company.
The new silicon foundry spinoff from AMD on March 4 officially
opened for business, divulged its corporate name and unveiled its
strategy. Now named GLOBALFOUNDRIES, the spin-off will compete
against other foundry vendors, but the startup has its sights set
on market leader Taiwan Semiconductor Manufacturing Co. Ltd.
(TSMC), according to the EE Times.
AMD, says WSJ, received about $700 million from Advanced
Technology Investment Company of Abu Dhabi for a portion of its
ownership interests in the Foundry, which assumed responsibility
for repaying $1.1 billion of AMD debt.
WSJ relates that the deal includes an investment by Mubadala
Development Co. WSJ notes that Mubadala Development paid AMD about
$125 million for 58 million newly issued AMD shares and warrants
for 35 million additional shares.
According to the report, the spinoff was aimed at boosting AMD's
balance sheet and refocusing the Company on designing chips,
instead of making them. AMD reported a $1.42 billion fourth-
quarter loss in January 2009, hurt by a declining environment for
computer sales as well as big write-offs, the report states.
GLOBALFOUNDRIES Press Release
GLOBALFOUNDRIES, in its statement announcing its March 4
launching, said it is led by an experienced semiconductor
management team, including CEO Doug Grose, formerly senior vice
president of manufacturing operations at AMD, and Chairman of the
Board Hector Ruiz, formerly executive chairman and chairman of the
board at AMD. It added that it is the only U.S. based global
semiconductor foundry and commences operations with approximately
3,000 employees worldwide with headquarters in Silicon Valley.
To meet the long-term needs of the industry, GLOBALFOUNDRIES is
proceeding with plans to expand its Dresden, Germany,
manufacturing lines by bringing a second 300mm manufacturing
facility with bulk silicon capabilities online in late 2009. The
Dresden cluster will be re-named Fab 1 with Module 1 initially
focused on production of high-performance 45nm Silicon-on-
Insulator (SOI) technology, and Module 2 transitioning to 32nm
bulk silicon capabilities.
In addition to Fab 1, the company also plans to begin construction
on a new state-of-the-art 32nm and smaller features, $4.2B
manufacturing facility at the Luther Forest Technology Campus in
Saratoga County, NY, in 2009. This new facility will be named Fab
2 and is expected to create approximately 1,400 new direct jobs
and more than 5,000 indirect jobs in the region. Once
operational, Fab 2 will be the only independently managed,
advanced semiconductor manufacturing foundry in the United States,
bucking the trend of manufacturing industries leaving the U.S.
GLOBALFOUNDRIES is jointly owned by AMD, an industry-leading
provider of processing solutions and ATIC, an investment company
focused on advanced technology opportunities.
About Advanced Micro
Headquartered in Sunnyvale, California, Advanced Micro Devices
Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative
processing solutions in the computing, graphics and consumer
electronics markets.
As of December 27, 2008, the company's balance sheet showed total
assets of $7,675,000,000, total current debts of $2,226,000,000,
deferred income taxes of $91,000,000, long-term debt and capital
lease obligations of $4,702,000,000, other long-term liabilities
of $569,000,000, minority interest in consolidated subsidiaries of
$169,000,000, and total stockholders' deficit of $82,000,000.
* * *
As reported in the Troubled Company Reporter on Aug. 12, 2008,
Fitch Ratings affirmed these ratings on Advanced Micro Devices
Inc.: Issuer Default Rating at 'B-'; Senior unsecured debt at
'CCC/RR6' and Rating Outlook at Negative.
The TCR reported on Feb 23, 2009, that Moody's Investors Service
said Advanced Micro Device's shareholder approval for its asset
smart strategy does not affect the company's B3 Corporate Family
Rating and negative ratings outlook
ADVANCED MICRO: Bruce Claflin Appointed as Board Chairman
---------------------------------------------------------
Bruce Claflin has been appointed as Chairman of Advanced Micro
Devices, Inc.'s Board of Directors. Mr. Claflin replaces Hector
Ruiz, who retired from AMD's Board in conjunction with assuming
the position of Chairman of the Board of "The Foundry Company."
Mr. Claflin has been a member of AMD's Board of Directors since
August, 2003.
The AMD Board also appointed Waleed Al Mokarrab to the Board. Mr.
Al Mokarrab is chief operating officer of Mubadala Development
Company.
"Bruce Claflin brings a wealth of business experience that applies
directly to the challenges and opportunities relevant to our
company," said Dirk Meyer, president and chief executive officer
of AMD. "We are also honored to welcome Waleed Al Mokarrab to the
Board. His experience in business development across a broad
range of industries will be an invaluable asset to AMD."
Mr. Meyer continues in his role as president and CEO, and as a
member of the AMD Board of Directors.
Mr. Claflin has 33 years of experience in senior positions with
IBM, Digital Equipment and most recently as CEO and member of the
board of directors of 3Com Corporation, a provider of voice and
data networking products and services. He has run major personal
computer businesses and has extensive international experience,
including the founding and management of international joint
ventures. In 2006, Mr. Claflin retired from 3Com Corporation.
Mr. Claflin is also a member of the board of directors for Ciena
Corporation.
Waleed Al Mokarrab is the Chief Operating Officer of Mubadala.
His primary responsibilities are to oversee Mubadala's operational
and business development activities. These include Mubadala's
international acquisitions and business development activities
across a broad range of industries such as healthcare, education,
energy, infrastructure, aerospace, real estate and technology.
Prior to joining Mubadala, Mr. Al Mokarrab worked with the UAE
Offsets Group as a Senior Projects Manager. He brought with him a
wealth of experience from McKinsey & Company where he worked as a
Consultant, advising on a range of industrial and governmental
projects.
About Advanced Micro
Headquartered in Sunnyvale, California, Advanced Micro Devices
Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative
processing solutions in the computing, graphics and consumer
electronics markets.
As of December 27, 2008, the company's balance sheet showed total
assets of $7,675,000,000, total current debts of $2,226,000,000,
deferred income taxes of $91,000,000, long-term debt and capital
lease obligations of $4,702,000,000, other long-term liabilities
of $569,000,000, minority interest in consolidated subsidiaries of
$169,000,000, and total stockholders' deficit of $82,000,000.
* * *
As reported in the Troubled Company Reporter on Aug. 12, 2008,
Fitch Ratings affirmed these ratings on Advanced Micro Devices
Inc.: Issuer Default Rating at 'B-'; Senior unsecured debt at
'CCC/RR6' and Rating Outlook at Negative.
The TCR reported on Feb 23, 2009, that Moody's Investors Service
said Advanced Micro Device's shareholder approval for its asset
smart strategy does not affect the company's B3 Corporate Family
Rating and negative ratings outlook
ADVANTAGE RENT-A-CAR: Enterprise Signs Deal to Acquire Assets
-------------------------------------------------------------
Enterprise Rent-A-Car said it has reached an agreement to purchase
certain assets of Advantage Rent-A-Car on Enterprise for $19
million. The transaction is subject to approval by the bankruptcy
court, which may also consider competing bids. If accepted, the
transaction is expected to close in April 2009.
The asset purchase agreement gives Enterprise the ability to close
or continue to operate any of Advantage's rental car facilities.
Currently, Advantage operates eight locations in four cities:
Denver, Orlando, Salt Lake City, and Phoenix. The transaction
also applies to certain other Advantage properties that recently
closed.
Upon the court's approval of the Enterprise purchase agreement,
Enterprise will take ownership of:
* the right to lease all or part or Advantage's rental
vehicle fleet;
* Advantage's customer lists;
* Advantage's Web address and toll-free reservation phone
lines;
* certain Advantage corporate accounts;
* Advantage Rent-A-Car trademark and copyright marks;
* Advantage Yellow Pages advertising; and
* Advantage trade secrets, know-how, and other intellectual
property.
Advantage Chairperson Dennis Hecker will enter into a consulting
agreement with Enterprise as part of the transaction. "We look
forward to working with Mr. Hecker in the coming years and to
serving the quality customer base he built at Advantage," said
Andrew Taylor, chairperson and chief executive officer of
Enterprise Rent-A-Car.
"I am excited by the sale of Advantage to Enterprise," said Mr.
Hecker. "I am confident that Advantage's loyal customers will
enjoy the great service and the expanded network of locations
offered by the Enterprise companies."
About the Enterprise Family of Companies
Headquartered in St. Louis, the Enterprise family of companies
operates Enterprise Rent-A-Car, National Car Rental, and Alamo
Rent A Car at more than 8,000 rental locations in neighborhoods
and at airports worldwide.
Enterprise Rent-A-Car Company --
http://www.enterprise.com/car_rental/home.do-- is a privately
held St. Louis, Missouri-based rental car company serving
customers in the U.S., Canada, Germany, Ireland, Puerto Rico, and
the U.K. They are also the owners of the Vanguard Automotive
Group, operator of National Car Rental and Alamo Rent A Car in
North America.
Enterprise Rent-A-Car is the largest rental car company in North
America, and has more than 6,900 offices.
About Advantage Rent A Car
Advantage Rent A Car -- http://www.advantage.com-- is a car
rental company with 50 locations in the U.S. and 130 international
affiliate locations. It is privately held by Denny Hecker Family
Ventures, with headquarter operations in Minneapolis. Advantage
serves travel and leisure, lifestyle, business, government and
insurance replacement rentals. The Hecker group of companies
include automobile dealerships, leasing, daily automobile and
motorcycle rental, commercial, and residential real estate
development, aviation, hospitality, and technology.
As reported by the Troubled Company Reporter on Dec. 10, 2008,
Advantage Rent A Car filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the District of Minnesota.
ALFRED CARR: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Alfred Franklin Carr
39 Snow Road
Hawkinsville, GA 31036
Bankruptcy Case No.: 09-50558
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Middle District of Georgia (Macon)
Judge: James D. Walker, Jr.
Debtor's Counsel: James P. Smith
Stone & Baxter, LLP
577 Mulberry Street, Suite 800
Macon, GA 31201
Tel: (478) 750-9898
Fax: (478) 750-9899
Email: jsmith@stoneandbaxter.com
Total Assets: $2,773,160
Total Debts: $3,841,511
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/gamb09-50558.pdf
ALLIANT TECHSYSTEMS: Moody's Keeps 'Ba3' Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service affirmed Alliant Techsystems, Inc.'s
Corporate Family and Probability of Default ratings of Ba3 and
revised the outlook to stable from negative. At the same time,
the rating agency affirmed the Ba1 rating on the company's secured
bank credit facilities and the B1 rating on its subordinated and
convertible subordinated notes. The actions recognize continued
strong performance by ATK's aerospace and defense businesses as
well as its improved liquidity profile as put/call dates approach
on $280 million of convertible subordinated notes in August 2009.
Through the first nine months of fiscal 2009, ATK's adjusted EBITA
expanded some 7% over the corresponding period of a year ago as
two of its segments (armaments and mission systems) experienced
growth which offset some minor weakness at its third segment
(space systems) which encountered some run-off from completed
contracts and other delays. With sustained EBITA margins above
10%, EBITA/interest coverage of roughly 5 times and continued
substantial free cash flow generation, several metrics are
suggestive of higher rating categories. However, debt/EBITDA
remains in the mid-three times range, and, if likely adjustments
for elevated pension liabilities due to asset performance across
global capital markets were made, leverage could be higher prior
to consideration of the company's plans to voluntarily increase
contributions in fiscal 2010. Given the company's growing back-
log of orders but still evolving defense priorities of a new
administration, Moody's would expect favorable operating trends to
continue through fiscal 2010 although growth may be at a more
subdued pace.
Since September 2007, two issues of ATK's convertible subordinated
notes (total $480 million) had periodically broached defined
threshold share prices (roughly $103-$104/share) which could have
enabled note-holders to put the full amount of the notes to the
company with the principal amounts required to be settled in cash.
As the company's share price has retreated noticeably below the
trigger points, this risk has subsided. However, one issue
involving $280 million of principal has a put date to the company
on August 15, 2009 regardless of share price. Five days later,
the company has an option to call the same notes. ATK's liquidity
position has improved as internally generated cash has been
retained and seasonal trends in working capital as well as near
term operating earnings should further boost cash balances prior
to the August put/call dates. At the same time, the company has
access to roughly $406 million of its committed revolving credit
facility (net of letters of credit issued against the $500 million
commitment). As a result, Moody's views ATK as having sufficient
resources to address the potential put and/or to reduce
indebtedness from using cash resources to call the notes.
The Ba3 Corporate Family rating continues to recognize a well
positioned business profile across three defense and space related
segments, and strong operating performance and cash flow
generation that has followed successful integration of previous
acquisitions. The ratings also consider the company's residual
leverage from its acquisition strategy and historical share
repurchase program. Leverage is considered relatively high but
acceptable for the rating category given the relative stability of
revenues and cash flow in this sector. Recent concerns over the
adequacy of the company's liquidity to cover potential calls on
cash driven by its convertible subordinated notes have retreated
and allow more of ATK's fundamental operating performance to be
reflected in the rating and outlook. The stable outlook
designates the abatement of liquidity concerns. While sustained
financial performance could exert upward pressure on the ratings,
ATK's capital structure continues with some fragility from
remaining contingently convertible subordinated debt and debt
maturity profile. Similarly, priorities of the new administration
with respect to certain space and launch system programs on which
ATK has content are still emerging and may dampen revenue
potential over time.
Ratings affirmed with updated Loss Given Default Assessments
-- Corporate Family rating, Ba3
-- Probability of Default rating, Ba3
-- $500 million revolving credit facility, Ba1 (LGD-2, 17%)
-- $275 million term loan, Ba1 (LGD-2, 17%)
-- $400 million senior subordinate notes, B1 (LGD-5, 70%)
-- $780 million of convertible subordinated notes, B1 (LGD-5,
70%)
The last rating action was on June 10, 2008 at which time the Ba3
Corporate Family rating was affirmed, but the rating on ATK's
secured bank credit facilities were revised to Ba1 as a result of
a lower amount of modeled junior claims in the Loss Given Default
waterfall.
Alliant Techsystems Inc, headquartered in Edina, MN, is a leading
supplier of propulsion, composite structures, munitions, precision
capabilities and civil and sporting ammunition. The company
operates three segments: Mission Systems, Launch Systems, and
Ammunition Systems. Revenues in fiscal 2009 are expected to be
approximately $4.5 billion.
AMBAC ASSURANCE: Moody's Reviews Insurance Strength Ratings
-----------------------------------------------------------
Moody's Investors Service has placed the Baa1 insurance financial
strength ratings of Ambac Assurance Corporation and Ambac
Assurance UK Limited on review for possible downgrade. In the
same rating action, Moody's also placed the debt ratings of Ambac
Financial Group, Inc. (senior unsecured debt at Ba1) on review for
possible downgrade. The review is prompted by the deterioration
in Ambac's qualified statutory capital position and the likelihood
of increased expected and stress case loss estimates among the
company's mortgage-related risk exposures relative to earlier
expectations. Prior to this review, the rating outlook for Ambac
was developing.
Moody's-rated securities that are guaranteed or "wrapped" by Ambac
are also placed under review for possible downgrade, except those
with higher published underlying ratings (and for structured
finance securities, except those with higher published or
unpublished underlying ratings).
Moody's review will focus on an analysis of risks related to
regulatory capital requirements, updating its assessment of
Ambac's capital adequacy position relative to its current risk
exposures, the degree to which the company's constrained holding
company liquidity and impaired financial flexibility impacts its
insurance financial strength and debt ratings, as well as
developments related to the establishment of Everspan Financial
Guarantee as a subsidiary of Ambac Assurance. Moody's said that
the outcome of the ratings review could result in a multi-notch
downgrade, including the possibility of non-investment grade
insurance financial strength ratings. Moody's expects to complete
its review of Ambac in the next few weeks.
Ambac's increased losses continue to reflect both the significant
volatility of the company's mortgage-related risk exposures as
well as the challenges inherent in estimating the losses that will
ultimately develop from this portfolio over time. During 4Q2008,
Ambac recorded $916 million in loss reserves, primarily related to
its direct residential mortgage-backed securities portfolio.
According to Moody's, Ambac's incurred losses in its RMBS
portfolio (excluding the $860 million in net remediation benefit
recorded by the company) are now meaningfully higher than the
rating agency's prior expected-case loss estimate.
In recent weeks, Moody's has announced significant increases in
Moody's expectations for losses on mortgage-related securities,
including subprime first lien pools, which are now expected to
result in cumulative losses in the range of 28% to 32% of original
pool balances (up from 22%) for the 2006 vintage. Moody's will
update its analysis of Ambac's mortgage-related exposures in the
context of actual performance as well as its developing view of
the severity of the decline in housing fundamentals, including the
potential impact of the Federal government's recently announced
stimulus and housing related initiatives.
Moody's said that Ambac's holding company liquidity is currently
under strain due to the absence of unrestricted dividend capacity
during 2009. Moody's notes that there is currently $233 million
of cash and intra-company loans at the holding company --
equivalent to approximately 1.8 years of debt service coverage and
holding company expenses. In Moody's opinion, the liquidity
situation at the holding company illustrates the importance of a
stabilization in Ambac's loss reserve position and for statutory
net income to be generated during 2009.
Ambac's guaranteed investment contract exposures ended the year at
approximately $2.6 billion, down from $7.7 billion at year-end
2007. The company's GIC liabilities are expected to further
decrease to about $1.8 billion by March 31, 2009. Moody's stated
that any further rating downgrades are not anticipated to result
in meaningful additional collateralization or termination
requirements in the company's financial services business in the
context of the intra-company liquidity support that exists.
The rating agency also stated that it has withdrawn the ratings on
Dutch Harbor Finance Sub-Trusts I-IV and Anchorage Finance Sub-
Trusts I-IV. The trusts were dissolved following Ambac's recent
exercise of its option to put preferred securities of Ambac
Assurance Corporation to the trusts, and those preferred
securities were then distributed to noteholders.
List Of Rating Actions
These ratings have been placed on review for possible downgrade:
* Ambac Assurance Corporation -- insurance financial strength at
Baa1;
* Ambac Assurance UK Limited -- insurance financial strength at
Baa1;
* Ambac Financial Group, Inc. -- senior unsecured debt at Ba1,
junior subordinated debt at Ba2 and provisional rating on
preferred stock at (P)Ba3.
These ratings have been withdrawn:
* Anchorage Finance Sub-Trusts I-IV -- contingent capital
securities at Ba1;
* Dutch Harbor Finance Sub-Trusts I-IV -- contingent capital
securities at Ba1.
The last rating action related to Ambac was on November 5, 2008,
when Moody's downgraded Ambac's insurance financial strength
rating to Baa1 from Aa3.
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private
sectors around the world. For the year ended December 31, 2008,
the company reported a GAAP net loss of approximately
$5.6 billion.
AMERICAN CAPITAL: S&P Cuts Counterparty Credit Rating to 'BB-'
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
ratings on Bethesda, Maryland-based American Capital Ltd.,
including lowering the long-term counterparty credit rating to
'BB-' from 'BBB-'. At the same time S&P removed the ratings from
CreditWatch Negative where they had been placed Nov. 10, 2008. The
outlook is negative.
"The ratings action reflects the significant unrealized portfolio
depreciation the firm has suffered during the past four quarters;
uncertainty with respect to negotiations with lenders on covenant
flexibility; and weakening operating income," said Standard &
Poor's credit analyst Jeffrey Zaun. ACAS reported $1.6 billion of
unrealized depreciation in fourth-quarter 2008 and
$3.5 billion for all of 2008. The significant amount of
depreciation results in a breach of some of the covenants on the
company's debt and will force management to seek additional
covenant relief, after having already done so in third-quarter
2008.
ACAS's past-due and nonaccrual loans at face value as a percentage
of total loans increased to 14.5% on Dec. 31, 2008, from 10.7% on
Sept. 30, 2008, and from 7.5% at year-end 2007. In addition,
interest coverage by nondeal-dependent current income softened to
2.1x in the fourth quarter from 3.5x in the linked quarter and
2.5x in 2007. Pressure on this metric in conjunction with the
rise in nonperforming loans is particularly worrisome and
contributes to pressure on the ratings.
The negative outlook reflects heightened uncertainty with respect
to ACAS's ability to negotiate covenant relief successfully. S&P
believes the recession in the U.S. and Europe will hurt the
performance of portfolio investments generally, and those of ACAS
in particular, given its exposure in both regions. Although S&P
expects the firm to exit a significant number of investments as it
pares down its portfolio, many of these sales are likely to be at
a loss. S&P believes this will impair reported profit and
realized earnings. Most of the firm's asset sales should,
however, bolster liquidity and improve leverage metrics if the
proceeds are used to pay down debt.
S&P expects ACAS's access to equity or term debt funding to remain
impaired or curtailed through 2009, but coverage of interest
expenses by income that is not related to investment exits should
remain adequate.
S&P could lower the rating further if ACAS experiences significant
deterioration of interest coverage by realized earnings, or if the
firm is unable to negotiate an amendment to its tangible net worth
and asset-coverage covenants. S&P could also lower the ratings if
performance deteriorates to the point where S&P expects ACAS to
require additional covenant relief for net-worth or interest-
coverage covenants.
Conversely, S&P could revise the outlook to stable if the firm can
satisfactorily amend its debt covenants, stabilize portfolio
performance, and regain access to term debt and equity markets.
In the current economic environment, there is limited scope for
raising the ratings.
AMERICAN GREETINGS: S&P Keeps Neg. Watch on BB+ After RPG Purchase
------------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
Cleveland, Ohio-based American Greetings Corp., including the
'BB+' corporate credit rating, would remain on CreditWatch with
negative implications, following the company's announcement on
Feb. 27, 2009, that it acquired all of the issued and outstanding
capital stock of RPG Holding Inc. At the same time, the senior
unsecured notes due June 1, 2016 are still rated 'BB-', and remain
on CreditWatch with negative implications following the company's
$22 million add-on to the issue for a total of $222 million.
These notes have a recovery rating of '6', indicating that
noteholders can expect negligible (0%-10%) recovery in the event
of a payment default. The company also issued about $32.7 million
in additional senior notes (unrated) due 2016, and drew down $100
million in principal amount under the 'BBB-'-rated $100 million
multiple draw term loan feature of its $450 million credit
facility, which includes a 'BBB-'-rated $350 million revolving
credit facility. American Greetings had about $448.6 million in
debt as of Nov. 30, 2008.
"Standard & Poor's originally placed the ratings on American
Greetings on CreditWatch with negative implications on Dec. 23,
2008, following the company's weaker-than-expected earnings
announcement for the third quarter ended Nov. 28, 2008," said
Standard & Poor's credit analyst Christopher Johnson.
"We will review the company's financial and operating performance
for fiscal 2009, and assess its future financial policies,
including the use of proceeds from its $100 million delay-draw
term loan and any developments on its $75 million share repurchase
program, before resolving the CreditWatch listing," he continued.
AMERICAN INT'L: Former Gen Re Executive Imprisoned Due to Fraud
---------------------------------------------------------------
The Associated Press reports that a federal judge in Hartford has
sentenced former General Re Corp. senior vice president
Christopher Garand to a year and a day in federal prison for an
accounting fraud scandal that cost American International Group
Inc. shareholders more than $500 million.
Citing federal prosecutors, The AP relates that the fraud involved
AIG paying Gen Re in a secret deal to take out reinsurance
policies with the Company, propping up the Company's stock prices
and inflating reserves by $500 million.
Mr. Garand was also $150,000, The AP states.
About American International
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
ANIXTER INC: Moody's Assigns 'Ba2' Rating on $200 Mil. 2014 Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Anixter Inc.'s
proposed $200 million guaranteed senior unsecured notes, due 2014.
Moody's also affirmed the Ba2 corporate family rating of Anixter
International Inc. and the B1 rating on Anixter's 3.25% LYON's
notes. At the same time, Moody's downgraded Anixter Inc.'s
$200 million 5.95% guaranteed senior unsecured notes, due 2015.
The downgrade reflects the changes in the company's capital
structure within Moody's Loss-Given-Default rating methodology.
The additional unsecured debt at the Anixter Inc. legal entity
level increased the expected loss rate for the obligation. The
Ba2 ratings on the senior unsecured notes reflect the pari passu
status with all existing and future senior unsecured indebtedness.
The proceeds from the proposed note offering will be primarily
used to reduce funding under the company's accounts securitization
program and for general corporate purposes. The outlook is
stable.
The ratings assignment and affirmation is supported by the
company's consistently stable credit metrics, large and
diversified customer base, well-developed supplier relationships,
broad geographic diversification, substantial product breadth and
expertise, minimal capital expenditure requirements, and adequate
liquidity. The ratings also reflect that the counter-cyclical
nature of Anixter's working capital requirements may mitigate
deterioration of its credit metrics throughout what may be a long
and protracted downturn in the global economy. At the same time,
the ratings are tempered by the company's relatively high adjusted
debt leverage, modest operating margins, history of shareholder-
friendly financial policies including debt-financed dividends and
share repurchases, and integration risk associated with its many
acquisitions.
The stable rating outlook reflects Moody's expectation that,
despite the potential for further softness in several of Anixter's
key end-markets, Anixter should not experience a meaningful
deterioration in its key credit metrics, given the counter-
cyclical nature of the company's working capital requirements as
well as the benefits of geographic diversification. The outlook
considers Moody's expectation that going forward, Anixter's
primary focus will be debt reduction. Therefore, traditionally
shareholder-friendly financial policies are not expected to
significantly increase debt leverage.
The ongoing crisis in the U.S. financial system, the dismal
outlook for the global economy, exchange rate volatility and
falling copper prices are expected to curtail top-line revenue
growth of the company, and will likely contribute to negative
growth in 2009. For a company whose organic growth typically
exceeds the GDP growth rate in the U.S., a long and protracted
recession could still have serious implications. In this weak
macroeconomic environment, if Anixter is unable to maintain
reasonable operating margins (i.e., manage copper price pressure
and inventory obsolescence) in an environment of volatile exchange
rates (i.e., a stronger U.S. dollar placing demand on hold), its
ratings or outlook could face downward pressure.
The last rating action was on February 15, 2007 when Moody's
downgraded the corporate family rating Ba2 from Ba1. Anixter's
ratings were assigned by evaluating factors Moody's believes are
relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus
others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of Anixter's core industry and Anixter's ratings are
believed to be comparable to those of other issuers of similar
credit risk.
Ratings Assigned:
Issuer: Anixter Inc.
-- Senior Unsecured Notes, Ba2 (LGD3, 48%)
Ratings Affirmed:
Issuer: Anixter International Inc.
-- Corporate Family Rating, Ba2
-- LYON's Notes, B1 (LGD6, 90%) from B1 (LGD5, 87%)
Ratings Downgraded:
Issuer: Anixter Inc.
-- Senior Unsecured Notes, Ba2 (LGD3, 48%) from Ba1
Headquartered in Glenview, Illinois, Anixter International Inc. is
a leading global distributor of communications products and
electrical and electronic wire & cable, and a leading distributor
of fasteners and other small parts to Original Equipment
Manufacturers.
APEX SILVER: Court Confirms Joint Chapter 11 Plan
-------------------------------------------------
The Hon. James M. Peck of the United States Bankruptcy Court for
the Southern District of New York confirmed the joint Chapter 11
plan of reorganization dated Feb. 4, 2009, of Apex Silver Mines
Corporation and Apex Silver Mines Limited. Judge Peck found that
the Debtors' plan complies with each of the requirements of
Sections 1122, 1123 and 1129 of the Bankruptcy Code.
No objections to the plan were filed with the Court before the
confirmation objection deadline.
James Katchadurian, senior vice president of Epiq Bankruptcy
Solutions LLC, reported that all holders of Class 3, 4, 5 and 5
claims accepted the Debtor's plan.
According to the Troubled Company Reporter on Feb. 6, 2009, the
Debtors said in their Disclosure Statement that, together with
Sumitomo Corporation and holders of subordinated Notes, they have
concluded that recoveries to creditors would be maximized by the
Debtors' continued operations as a going concern under the terms
of the plan. The Debtors have agreed on the principle terms of
the plan with Sumitomo, the supporting senior lenders and the
subordinated noteholders that hold more than 70% of the
outstanding subordinated notes.
Overview of the Plan
The Plan contemplates, among other things:
i) payment in full in cash either on or after the plan's
effective date to holders of allowed:
a) administrative expense claims;
b) priority tax claims;
c) other priority claims; and
d) other secured claims;
ii) waiver of DIP facility financing claims, subject to the
terms and conditions of the DIP financing facility;
iii) waiver and release of allowed senior claims;
iv) pro rata (a)distribution to the holders of allowed
subordinated note claims of the cash allocation and
(b) issuance to the holders of allowed subordinated note
claims of the new common stock, subject to reduction in an
amount equal to any distributions made to holders of
allowed general unsecured claims and subject to dilution
under the management incentive plan;
v) depending on the election of each holder of a general
unsecured claim
a) payment of Cash equal to the amount of an allowed
general unsecured claim if such allowed general
unsecured claim is a convenience claim, or cash equal
to $10,000 if such allowed general unsecured claim is a
general unsecured claim in excess of $10,000; or
b) a pro rata share of new common stock to be issued under
the plan, subject to a reduction in an amount equal to
any distributions made to holders of subordinated note
claims and subject to dilution under the Management
incentive plan
vi) waiver and release of Sumitomo general unsecured claims;
and
vii) no recovery for holders of statutory subordinated claims
or old equity interests.
The plan further provides for limited substantive consolidation of
the Debtors' estates, but solely for purposes of voting on the
plan by Class 5 claims and making distributions to holders of
claims in such class under the Plan. On the plan's effective
date:
i) all assets and liabilities of the Debtors will, solely for
voting and distribution purposes for Class 5 Claims, be
treated as if they were merged;
ii) each Class 5 Claim against the Debtors will be deemed a
single Class 5 Claim against and a single obligation of the
Debtors;
iii) any Class 5 Claims filed or to be Filed in the Chapter 11
Cases will be deemed Class 5 claims against the Debtors;
iv) all transfers, disbursements and distributions to Class 5
claims made by any Debtor pursuant to the plan will be
deemed to be made by the Debtors;
v) all intercompany claims by, between, and among the Debtors
and affiliates will, solely for voting and distribution
purposes for Class 5 claims, be eliminated; and
vi) any obligation of the Debtors as to Class 5 claims will be
deemed to be one obligation of all of the Debtors.
Holders of Classes 3, 4, 5 and 6 are are entitled to vote to
accept or reject the plan.
The plan classifies interests against and liens in the Debtors in
eight groups. The classification of treatment of interest and
claims are:
Treatment of Claims
Type Estimated Estimated
Class of Claims Treatment Amount Recovery
----- --------- --------- --------- ---------
unclassified administrative 100%
claims
unclassified priority tax 100%
claims
unclassified DIP financing $35,000,000 0%
1 other priority unimpaired 100%
claims
2 other secured unimpaired 100%
claims
3 senior claims impaired $146,250,000 0%
4 subordinated impaired $290,000,000 unstated
note claims
5 general impaired unstated unstated
unsecured
claim
6 Sumitomo impaired NA 0%
general
unsecured
claims
7 statutory impaired NA 0%
subordinated
claims
8 old equity impaired NA 0%
interests
A full-text copy of the results of tabulation of ballots is
available for free at:
http://ResearchArchives.com/t/s?3a14
A full-text copy of the Debtors' proposed Chapter 11 plan of
reorganization is available for free at:
http://ResearchArchives.com/t/s?3843
A full-text copy of the Debtors' disclosure statement is available
for free at:
http://ResearchArchives.com/t/s?3844
About Apex Silver Mines
Headquartered in Denver, Colorado, Apex Silver Mines Limited --
http://www.apexsilver.com-- explores and develops silver and
other mineral properties in Central and South America. The
Company is based in George Town, Cayman Islands. The Company and
its affiliate, Apex Silver Mines Corporation, filed for Chapter 11
protection on January 12, 2009 (Bankr. S.D. N.Y. Lead Case No.
09-10182). James L. Bromley, Esq., and Sean A. O'Neal, Esq., at
Cleary Gottlieb Steen & Hamilton LLP, represent the Debtors in
their restructuring efforts. The proposed Davis Graham & Stubbs
LLP as special purpose counsel; Jefferies & Co, Inc. as financial
advisor; and Epiq Bankruptcy Solutions LLC as claims agent. When
the Debtors filed for protection from their creditors, they listed
assets and debts between $500 million to $1 billion each.
ARBY'S RESTAURANT: Moody's Affirms 'B2' Ratings on Wendy's Merger
-----------------------------------------------------------------
Moody's Investors Service affirmed Arby's Restaurant Group, Inc.'s
rating following an announcement by its parent company --
Wendy's/Arby's Group, Inc. -- that it intends to combine the
credit facilities of Arby's and Wendy's International, Inc. under
a single credit agreement. Wendy's and Arby's are wholly-owned
subsidiaries of Wendy's/Arby's Group, Inc and are currently
financed on a standalone basis with separate credit agreements.
Arby's has a negative outlook.
These ratings were affirmed:
-- Corporate Family Rating at B2
-- Probability of Default Rating at B3
-- Senior secured revolving credit facility expiring 2011 at B1
(LGD3, 30%)
-- Senior secured term loan B due 2012 at B1 (LGD3, 30%)
"The affirmation considers that despite management's expectation
of the potential benefit to Arby's with respect to covenant
compliance and financial flexibility, the consolidation of credit
agreements does not alleviate operating concerns of the Arby's
business. Weak consumer spending trends and increased competition
will continue to pressure liquidity and debt protection measures,
and remain the basis for Arby's current rating and outlook,"
stated Bill Fahy, Vice President.
The most recent rating action on Arby's occurred on October 29,
2008 when Moody's lowered the company's Corporate Family Rating to
B2 from B1 and assigned a negative outlook.
Arby's Restaurant Group, Inc. owns, operates, and franchises
sandwich focused quick service restaurants. The company generates
annual revenues of about $1.2 billion.
ATLAS PIPELINE: Cut by S&P to 'B', More Cuts Absent Asset Sales
---------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered the corporate
credit rating for Atlas Pipeline Partners L.P. to 'B' from 'B+'.
At the same time, S&P lowered APL's senior secured rating to 'B+'
from 'BB-' and senior unsecured rating to 'CCC+' from 'B-'. The
senior secured recovery rating of '2' and senior unsecured
recovery rating of '6' remain unchanged. The '6' recovery rating
indicates that unsecured lenders can expect negligible (0%-10%)
recovery in the event of a payment default, whereas the '2'
recovery rating on the secured revolver and term loan indicates
that secured lenders can expect substantial (70%-90%) recovery if
an event of default occurs. The ratings continue to be on
CreditWatch with negative implications.
The rating actions follow S&P's continued concerns about the
partnership's constrained liquidity, high leverage ratio, tight
bank leverage covenant, and a low hedge position for 2009 natural
gas liquids equity volumes relative to most of its rated peers.
While the company has taken steps to address liquidity with a
substantial fourth-quarter 2008 distribution cut and the
monetization of certain in-the-money NGL hedge positions, it is
S&P's opinion that liquidity will continue to be constrained
absent asset sales. Although the reduction in the distribution
helps support near-term liquidity, it is S&P's opinion that this
action reduces Atlas's capital markets access and limits the
partnership's financial flexibility for the foreseeable future.
S&P views the partnership's decision to explore the sale of its
NOARK pipeline asset, as well as interests in its nine-mile
processing plant and Appalachia assets, as supportive of credit
because of the potential deleveraging impact. However, S&P views
the transaction as having some execution risk, with the expected
realized proceeds uncertain. S&P also views the potential sale of
NOARK and Appalachia as potentially adding more risk to the
company's business and financial profiles, because Atlas would
give up fee-based gathering and transmission revenue, as well as
the asset and geographic diversity that the two assets now
provide. Furthermore, S&P believes the partnership may have
significant exposure to low commodity prices, particular declining
prices of NGL, which could continue to pressure cash flow,
particularly if the forward price curve flattens during 2009.
The ratings on Atlas reflect high leverage, tight liquidity, a
weak commodity price environment, an elevated risk of cash flow
volatility, and limited geographic and asset diversity. The
company's successful integration of the Chaney Dell and
Midkiff/Benedum gathering and processing systems, well positioned
asset base in the Mid-Continent and Appalachia regions, and
successful execution on a number of small organic growth projects
partially offset these risks.
"In resolving the CreditWatch listing, S&P expects to assess the
impact of any potential asset sales on the partnership's 2009
liquidity position and leverage, with particular focus on covenant
headroom and liquidity cushion, said Standard & Poor's credit
analyst Michael Grande.
Specifically, S&P will evaluate the amount of availability under
the partnership's revolver, with the expectation that the
partnership would have at least $100 million of availability. S&P
will also continue to monitor the partnership's hedge position,
and the amount of cash flow exposed to commodity prices, including
the effect any potential transaction may have on Atlas's business
and financial risk profiles. There is the potential for a multi-
notch downgrade if the asset sales do not proceed as planned or
cash proceeds are not as much as expected, given the partnership's
current lack of financial flexibility. Given that market
fundamentals are weak, S&P would not anticipate a positive outlook
or upgrade at this time. S&P would consider a positive outlook if
Atlas achieved a total debt to EBITDA ratio below 3.5x over a 12-
to 18-month period. S&P expects to resolve the CreditWatch
listing before the end of the second quarter 2009.
AUTOBACS STRAUSS: Gets Interim Approval to Access $20MM DIP Loan
----------------------------------------------------------------
Autobacs Strauss Inc. obtained from the U.S. Bankruptcy Court for
the District of Delaware permission, on the interim, to access
debtor-in-possession financing, Bloomberg's Bill Rochelle said.
Autobacs, doing business as Strauss Discount Auto, on Feb. 27
filed a motion seeking to access $20 million in secured financing.
The Court will consider final approval of the loan on March 27.
This is the third bankruptcy filing by Autobacs. According to
Bloomberg's Bill Rochelle, the immediately preceding Chapter 11
plan for the Company, then formally named R&S Parts & Service
Inc., was confirmed in April 2007. The Plan provided for full
payment to creditors in installments over 36 months so long as
unsecured claims didn't exceed $20.5 million. Still owed $8.2
million, creditors from the prior bankruptcy reorganization make
up the largest unsecured creditor group in the new Chapter 11
case, the report said.
Headquartered in South River, New Jersey, Autobacs Strauss Inc. --
http://www.straussauto.com/-- sells after-market automotive parts
and accessories, and operate automotive service centers located in
New York, New Jersey, Philadelphia, Bethlehem and Pennsylvania.
The Debtor operate 86 retail store locations and has about 1,450
employees. The Debtor filed for Chapter 11 protection on Feb. 4,
2009, (Bankr. D. Del. Case No.: 09-10358). Edward J. Kosmowski,
Esq. at Young Conaway Stargatt & Taylor, LLP represents the Debtor
in its restructuring efforts. As of Jan. 3, 2009, the Debtor had
total assets of $75,000,000 and total debts of $72,000,000.
AVIS BUDGET: Moody's Downgrades Ratings on 5 Asset Backed Notes
---------------------------------------------------------------
Moody's has downgraded five series of rental car asset backed
notes issued by Avis Budget Rental Car Funding, LLC, a subsidiary
of Avis Budget Rental Car LLC, owner/ operator of Avis Rent A Car
and Budget Rent A Car. These downgrades reflect both the
downgrade on February 5 of the corporate rating of Avis Budget Car
Rental LLC from Ba2/ Negative Outlook to B2/ Negative Outlook and,
in the case of the two series wrapped by MBIA Insurance, Inc., the
downgrade on February 18 of MBIA to B3. As described below,
Moody's incorporates the default probability of the sponsor in its
methodology for rating rental car asset backed securitizations
since, absent default, the sponsor is responsible for making
monthly payments from which principal and interest payments on the
rental car asset backed notes are made.
With this action, Moody's is publishing for the first time, the
underlying ratings of two series of insured notes as a result of
the downgrade of MBIA. Moody's Investors Service completed its
review of the underlying ratings on these insured notes. The
underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
notes named below are consistent with Moody's practice of rating
insured securities at the higher of the guarantor's insurance
financial strength rating and the underlying rating, based on
Moody's modified approach to rating structured finance securities
wrapped by financial guarantors.
Complete Rating Actions:
Issuer: Avis Budget Rental Car Funding LLC
-- Series 2003-4, Rental Car Asset-Backed Notes, Class A-4,
currently B2, previously on July 18, 2008, downgraded to
Baa3.
-- Financial Guarantor: Syncora Guaranty Inc., Caa1, under
review direction uncertain.
-- Underlying Rating: B2, previously on July 18, 2008 assigned
Baa3.
-- Series 2005-1, Rental Car Asset-Backed Notes, Class A-3,
currently B1, previously on November 16, 2008, A2, placed on
review direction uncertain
-- Financial Guarantor: MBIA Insurance Corp., B3
-- Underlying Rating: B1
-- Series 2006-1, Rental Car Asset-Backed Notes, currently Ba3,
previously on November 16, 2008, A2, placed on review
direction uncertain
-- Financial Guarantor: MBIA Insurance Corp., B3
-- Underlying Rating: Ba3
-- Series 2002-2 Variable Rate Rental Car Asset-Backed Notes,
currently Aa3, previously on December 31, 2008, assigned Aa2
-- Series 2008 -1 Variable Rate Rental Car Asset-Backed Notes,
currently Aa3, previously on December 31, 2008, assigned Aa2
Principal Rating Methodology
The primary asset backing the downgraded transactions is an
interest in a loan indirectly secured by vehicles comprising the
bulk of the Avis and Budget daily rental car fleets, including
both 'program' vehicles (acquired vehicles subject to repurchase
by the related auto manufacturer at pre-set prices) and non-
program vehicles (acquired vehicles that do not benefit from such
repurchase agreements).
The key factors in Moody's rating analysis include the probability
of default of ABCR, the likelihood of bankruptcy default of the
auto manufacturers providing vehicles to the rental car fleet
owned by RCF, and the recovery rate on the rental car fleet in
case ABCR defaults. Monte Carlo simulation modeling was used to
assess the impact on bondholders of these variables.
The default probability of ABCR was simulated based on its current
corporate family rating and Moody's idealized default rates. Like
all rental car companies, ABCR's fleet (the majority of which is
owned by RCF) includes both program cars and non-program or 'risk'
cars. Under the terms of the simulation, in cases where ABCR does
not default then it is assumed that bondholders are repaid in full
and no liquidation of the RCF rental car fleet is necessary. In
cases where ABCR does default, the RCF fleet must be liquidated in
order to repay bondholders. In those cases, defaults of the
related auto manufacturers must also be simulated. Due to the
Detroit Three's current highly uncertain credit status, their
defaults were simulated based on estimates for probability of
default provided by Moody's corporate analysts which incorporated
estimates for the likelihood of both Chapter 7 and Chapter 11
bankruptcies as well as the potential, in a Chapter 11 scenario,
for an auto manufacturer to honor its repurchase obligation.
In simulating liquidation of the rental car fleet following an
ABCR default, it is assumed the non-program fleet will be sold at
the end of a six-month delay period with certain haircuts to the
estimated market value of the vehicles at time of liquidation.
The delay is incorporated to reflect potential legal challenges to
obtaining control of the fleet and the potential difficulties of
marshaling and selling such a large quantity of vehicles. If at
the same time an auto manufacturer also defaults, additional
haircuts are assumed for its portion of the fleet. Moody's assume
more stressful haircuts for a Chapter 7 filing by the manufacturer
than for a Chapter 11 reorganization.
For program vehicles, it is assumed that when ABCR defaults, the
program vehicles will be disposed of based on the default status
of each related manufacturer. If a manufacturer does not default,
then, at the end of the six-month delay period, that
manufacturer's program vehicles will be turned back to the
manufacturer based on the terms of the buyback agreement. If the
manufacturer is assumed to be in Chapter 11, Moody's assume that
there is a certain probability that the buyback obligation
nevertheless will be honored. If the buyback agreement is
honored, the program vehicles will be put back to the
manufacturers based on the buyback agreement. If the buyback
agreement is rejected, then it is assumed that the defaulting
manufacturer's program vehicles will be sold as risk vehicles in
the auction market, with the haircut for risk vehicles in Chapter
11 applied. If a manufacturer is assumed to be in Chapter 7, then
Moody's assume that the buyback agreement is never honored and the
manufacturer's program vehicles will be liquidated as risk
vehicles in the auction market, with the haircut for risk vehicles
in Chapter 7 applied.
In all cases, the market value of a vehicle at time of liquidation
is estimated using market depreciation data from the National
Automobile Dealers Association for each manufacturer in the
collateral pool. Recovery rate is calculated as disposal proceeds
divided by book value (value under the terms of the
securitization) at the time of disposal.
BAKER & TAYLOR: S&P Downgrades Ratings to "B-" on Sales Drop
------------------------------------------------------------
Standard & Poor's Rating Services said it lowered its corporate
credit rating on Charlotte, North Carolina-based Baker & Taylor
Acquisitions Corp. to 'B-' from 'B'. At the same time, S&P
lowered the rating on the $165 million senior secured notes to
'CCC' from 'CCC+'. The outlook is negative.
"The downgrade reflects a recent substantial drop in sales to
traditional retailers, margin pressures from operational
deleveraging, and expectations for a challenging retail
environment over the near term," said Standard & Poor's credit
analyst David Kuntz. He cited the anticipated deterioration of
the company's credit protection metrics as an additional factor.
BANK OF AMERICA: Deutsche Sued for Luring Merrill's Bankers
-----------------------------------------------------------
Chad Bray at Dow Jones Newswires reports that Merrill Lynch & Co.
has filed a lawsuit against Deutsche Bank AG in New York State
Supreme Court for hiring former Merrill Lynch Treasurer Eric
Heaton and 11 members of the Company's financial institutions
group.
According to Dow Jones, Merrill Lynch claims that Deutsche Bank
"raided" its business. Dow Jones relates that Merrill Lynch
alleged that Deutsche Bank improperly lured away a group of
investment bankers that "generated tens of millions of dollars in
annual revenues" and "clearly mapped out its raid many months in
advance." Those employees gave abrupt notice of their voluntary
resignations on February 3, says the report. "The rapid-fire
resignations of 12 Merrill Lynch employees, in New York, London
and Hong Kong, could not have occurred without premeditated and
precise coordination between Deutsche Bank and these Merrill Lynch
employees and, upon information and belief, breaches of Merrill
Lynch's contractual, fiduciary and other rights," Dow Jones quoted
Merrill Lynch as saying.
Merrill Lynch, according to Dow Jones, claims that Deutsche Bank
is legally prohibited from hiring nine of the 12 workers it took
from the Company for 30 to 90 days. Merrill Lynch said in a
statement, "We believe these mass resignations were part of a
carefully orchestrated plot by Deutsche Bank to raid a key Merrill
Lynch business unit in violation of Merrill's trade secret and
fiduciary rights and to encourage employees with ongoing
obligations and common law duties to Merrill Lynch to breach them
and leave."
Dow Jones relates that Merrill Lynch also sued Mr. Heaton,
claiming that he and Deutsche Bank have made it clear that he
won't fully honor an obligation that he should provide six-month
notice of his resignation to Merrill Lynch. Dow Jones, citing
Merrill Lynch, reports that Mr. Heaton is bound by a non-compete
provision, which expires on January 31, 2010. Dow Jones quoted
Mr. Heaton as saying, "We believe he had a role in persuading and
encouraging others to leave Merrill Lynch and join Deutsche Bank
in violation of his duty of loyalty to Merrill Lynch."
Attorney General Subpoenas Top Executives
Citing people familiar with the matter, Susanne Craig and Dan
Fitzpatrick at WSJ relates that New York state's attorney general,
Andrew Cuomo, has issued subpoenas to these top Merrill Lynch &
Co. executives who each received more than $10 million in cash and
stock from the Company last year:
-- Andrea Orcel, the top investment banker at Merrill Lynch:
-- global sales and trading chief Thomas Montag; and
-- Peter Kraus, Merrill Lynch's former chief of strategy.
According to WSJ, Messrs. Orcel and Montag are currently working
at Bank of America Corp. Mr. Kraus is currently chief executive
of investment-management firm AllianceBernstein Holding LP, says
WSJ. WSJ states that they were paid more than $25 million each in
2008.
WSJ says that Merrill Lynch paid out billions of dollars in bonus
though it posted a fourth-quarter net loss of $15.84 billion last
year. Mr. Cuomo, according to the report, is investigating
whether the bonuses breached security laws. The report, citing
people familiar with the matter, says that Mr. Cuomo is concerned
that Bank of America and Merrill Lynch didn't disclose their
agreement to a bonus payout of as much as $5.8 billion, when the
takeover deal was reached in September. Mr. Cuomo, the report
states, is also investigating Bank of America's role in paying out
the bonuses. Bank of America has filed a petition in the New York
state court asking for confidentiality of the pay data, according
to the report.
Bank of America chairman Kenneth Lewis has told investigators that
he had "no authority" over Merrill's bonuses, WSJ reports.
About Bank of America
Bank of America is one of the world's largest financial
institutions, serving individual consumers, small and middle
market businesses and large corporations with a full range of
banking, investing, asset management and other financial and risk-
management products and services. The company provides unmatched
convenience in the United States, serving more than
59 million consumer and small business relationships with more
than 6,100 retail banking offices, nearly 18,700 ATMs and award-
winning online banking with nearly 29 million active users.
Following the acquisition of Merrill Lynch on January 1, 2009,
Bank of America is among the world's leading wealth management
companies and is a global leader in corporate and investment
banking and trading across a broad range of asset classes serving
corporations, governments, institutions and individuals around the
world. Bank of America offers industry-leading support to more
than 4 million small business owners through a suite of
innovative, easy-to-use online products and services. The company
serves clients in more than 40 countries. Bank of America
Corporation stock is a component of the Dow Jones Industrial
Average and is listed on the New York Stock Exchange.
The bank needed the government's financial help in completing its
acquisition of Merrill Lynch.
Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth
management, capital markets and advisory companies with offices in
40 countries and territories. As an investment bank, it is a
leading global trader and underwriter of securities and
derivatives across a broad range of asset classes and serves as a
strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch owns approximately half of
BlackRock, one of the world's largest publicly traded investment
management companies with more than $1 trillion in assets under
management. Merrill Lynch's operations are organized into two
business segments: Global Markets and Investment Banking (GMI) and
Global Wealth Management (GWM).
BANK OF AMERICA: S&P Cuts Long-Term Counterparty Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its long-
term counterparty credit rating on Bank of America Corp. to 'A'
from 'A+'.
Standard & Poor's also said that it affirmed its 'A-1' short-term
ratings on BofA.
In addition, Standard & Poor's lowered its ratings on BofA's bank
subsidiaries to 'A+/A-1' from 'AA-/A-1+'. Standard & Poor's also
lowered BofA's hybrid rating to 'BB-' from 'BBB' and the hybrid
ratings on the bank subsidiaries to 'BB' from 'BBB+' and affirmed
its 'AAA' rating on the FDIC-guaranteed debt of BofA and its
subsidiaries.
The outlook on BofA and its bank subsidiaries remains negative.
"We downgraded BofA one notch because S&P believes that the
economic weakness will persist and that in turn, earnings
pressures will be more intense than S&P anticipated as recently as
Dec. 19, 2008, the date of S&P's last downgrade of BofA," said
Standard & Poor's credit analyst John K. Bartko. (See "Bank of
America Corp. Ratings Lowered to 'A+/A-1'; Outlook Negative" and
"Twelve Major U.S. And European Financial Institutions Have
Ratings Lowered, Outlooks Revised," both published on Dec. 19,
2008, on RatingsDirect.) BofA's creditworthiness has deteriorated
given its exposure to consumer credit and more generally to
various asset types that have approached--and, in certain
instances, exceeded--the stress tests S&P used as a basis for
S&P's Dec. 19, 2008, sector review of large complex banks and
brokers.
S&P lowered the hybrid capital rating by four notches because of
S&P's view that the risk that BofA could defer dividend payments
has increased. The downgrade of the hybrid capital issues
reflects S&P's heightened concern that with the potential for a
high degree of earning volatility in upcoming periods, BofA
management could decide to exercise its option not to pay
dividends, either at its own initiative or at the behest of
regulators. S&P believes the recent deferral of dividends at
Citigroup demonstrates a precedent for a highly systemic bank to
defer hybrid dividends.
The outlook is negative. S&P's ratings on BofA consider a material
weakening in the operating environment leading to declines in
earnings. Further write-downs associated with the Countrywide and
Merrill Lynch acquisitions are also a possibility.
When S&P downgraded BofA on Dec. 19, 2008, S&P stated that S&P
expected earnings to be 50%-75% of the normal run rate of about
$20 billion. In light of fourth-quarter results at both Merrill
Lynch and BofA, this expectation appears significantly less
likely. The action and the negative outlook reflect the reduced
likelihood of such earnings levels and incorporate S&P's
expectation for break-even performance. However, S&P sees some
potential for earnings to be substantially worse than S&P now
expects, making further government assistance a potential
development. This raises the possibility that debtholders could
then be required to participate in those further restructuring
actions.
More downgrades could follow if losses were to continue to
pressure common equity levels. S&P could revise the outlook to
stable if BofA's earnings and general business dynamics prove
resilient through the current cycle downturn, as its better-than-
projected core earnings, stable/improving asset-quality measures,
and appropriate capital levels would demonstrate. However, S&P
views this as unlikely.
BEARINGPOINT INC: Still Entertaining Offers for Assets
------------------------------------------------------
BearingPoint Inc. filed minor revisions to its pre-packaged
chapter 11 plan of reorganization and explanatory disclosure
statement.
Both versions of the Disclosure Statement, which explains the
terms of the Plan, provide that BearingPoint is expected to emerge
from bankruptcy with a de-levered balance sheet, with prepetition
creditors receiving the shares of stock of the reorganized
company. The Revised DS, as well as the original DS, provides
that pre-bankruptcy, the Company was entertaining offers for the
business, but interest to buy the company in parts or as a whole
was low.
The Revised DS, however, adds a sentence that the Company is still
entertaining offers for its assets.
In January 2008, BearingPoint engaged Greenhill & Co., Inc. to
advise the Board with respect to strategic alternatives, a
strategic transaction involving a sale of all or a portion of
BearingPoint's assets, or an equity investment in BearingPoint.
While approximately 25 strategic and financial buyers have
approached BearingPoint or Greenhill with an interest in buying
parts of BearingPoint, all proposals that were furnished either
appeared impractical or were unlikely to be consummated in time to
address the April 15, 2009 Put Right for holders of Series C
Priority Subordinated Notes aggregating $200,000.
"As a result, as of the bankruptcy petition date, no sales of
portions of BearingPoint's business have occurred and the
likelihood of consummating either a comprehensive sale of
BearingPoint or discrete asset sales was low".
"Nonetheless, Bearingpoint is continuing to entertain offers from
parties interested in acquiring assets," the Revised DS says.
BearingPoint's plan, which was negotiated with secured lenders,
proposes to (i) exchange at least $323,250,000 in prepetition term
loans with preferred stock and new loans, (ii) pay 0 to 28 cents
on the dollar to senior noteholders owed $243,458,073 with class 1
common stock, (iii) pay junior noteholders owed 452,85,881 with
class 2 common stock (estimated recovery 0%), (iv) pay $90,000,000
in unsecured claims with class 3 common stock, for an estimated
recovery of 0 to 10%, (v) cancel equity interests and provide no
distribution to equity holders.
About BearingPoint, Inc.
BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently
one of the world's largest providers of management and technology
consulting services to Global 2000 companies and government
organizations in more than 60 countries worldwide. Based in
McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP -
- has approximately 15,000 employees focusing on the Public
Services, Commercial Services and Financial Services industries.
BearingPoint professionals have built a reputation for knowing
what it takes to help clients achieve their goals, and working
closely with them to get the job done. The Company's service
offerings are designed to help clients generate revenue, increase
cost-effectiveness, manage regulatory compliance, integrate
information and transition to "next-generation" technology.
BearingPoint, Inc. fka KPMG Consulting, Inc., together with its
units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D.
N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal
& Manges LLP, has been tapped as counsel. Greenhill & Co., LLC,
and AP Services LLC, have also been tapped as advisors. Davis
Polk & Wardell is special corporate counsel. BearingPoint
disclosed total assets of $1,762,689,000, and debts of
$2,231,839,000 as of Sept. 30, 2008. BearingPoint filed,
simultaneous to its Chapter 11 petition, a proposed plan of
reorganization, the terms of which was negotiated pre-bankruptcy
with secured lenders.
BEARINGPOINT INC: Terms of Amended Plan & Disclosure Statement
--------------------------------------------------------------
BearingPoint Inc. and its debtor-affiliates delivered on March 2,
2009, to the United States Bankruptcy Court for the Southern
District of Delaware an amended versions of their Chapter 11 plan
of reorganization and explanatory disclosure statement.
Overview of the Plan
The Plan treats all creditors in accordance with their relative
priorities under the Bankruptcy Code. The secured bank lenders
are converting their existing term loan into an exit term loan and
preferred stock in the reorganized company. They also continue to
provide a synthetic letter of credit facility. The unsecured
creditors will receive all of the common stock of the reorganized
company, subject to dilution for common stock issued to management
and employees under incentive plans to be implemented and for
common stock issued upon conversion of the preferred stock.
General unsecured creditors, other than those that are classified
as "Convenience Claims," will receive "New Class 3 Common Stock,"
while senior noteholders will receive "New Class 1 Common Stock"
and junior noteholders will receive "New Class 2 Common Stock."
The three classes of common stock are equal except that, in
recognition of the prepetition subordination agreement between
the senior noteholders and the junior noteholders, the senior
noteholders are entitled to receive the distributions that would
otherwise be paid to the junior noteholders and certain voting
rights that otherwise would be attributable to the shares issued
to the junior noteholders, until the holders of the New Class 21
Common Stock receive distributions equal to $240 million, which is
the principal amount of the senior noteholders' prepetition
claims. Importantly, the holders of common stock are not entitled
to any distribution -- and are subject to further restrictions on
transfer -- until the preferred stock is paid the full amount of
its liquidating preference -- $50 million plus accrued and unpaid
dividends.
An informal Steering Committee of the holders of the Junior Notes
has retained the services of the law firm Ropes & Gray LLP and
financial advisor Imperial Capital to represent them in connection
with restructuring negotiations in the Chapter 11 Cases.
The Debtors believe that the Plan is the best alternative
available to the Debtors at this time and maximizes value for all
creditors. The Plan will enable the Debtors to stabilize their
businesses and do what they do best -- provide excellent client
service -- without the distractions that their financial situation
has created. The Debtors urge all creditors to vote to accept the
Plan.
The Plan classifies interests against and liens in the Debtors' in
10 classes. The classification of treatment of claims and
interest are:
Treatment of Claims
Estimated Estimated
Class Type of Claim Treatment Amount Recovery
----- ------------- --------- --------- ----------
N/A administrative undetermined 100%
N/A professional undetermined 100%
compensation and
reimbursement
N/A priority tax undetermined 100%
1 priority non- unimpaired undetermined 100%
tax
2 secured tax unimpaired undetermined 100%
3 secured credit impaired $323,250,000 93%-100%
4 secured letter impaired $84,388 100%
of credit family
5 other secured unimpaired undetermined 100%
6 senior noteholder impaired $243,458 0%-28%
7 junior noteholder impaired $452,852 0%
8 general unsecured impaired $90,000,000- 0%-10%
$110,000,000
9 convenience class impaired unstated unstated
10 equity interest impaired $0 0%
Means of Implementation
The Debtors and the Secured Lenders have agreed in principle to
the principal terms for a new secured credit facility which will
replace the Secured Credit Facility and provide:
i) a term loan in the amount of (a) $272,000,000 plus (b) the
sum of any Drawn Pre-Filing Date LCs plus (c) accrued but
unpaid interest outstanding under the Secured Credit
Facility as of the Effective Date; and
ii) a synthetic letter of credit facility of $130,000,000 less
any Drawn Pre-Filing Date LCs, which shall consist of (a)
$84,388,501 of letters of credit issued and outstanding as
of the Commencement Date, less any Drawn Pre-Filing Date
LCs, (b) letters of credit issued during the Cases and
back-stopped during the Cases by the use of cash collateral,
and which letters of credit shall not exceed $20,000,000,
and (c) capacity for letters of credit to be issued after
the Effective Date.
On the Effective Date, letters of credit cash collateralized
during the Cases will be issued under the LC Facility to replace
the Cash Collateralized LCs. Any cash collateral used to secure
letters of credit during the Cases shall be returned to the
Debtors upon the issuance of such Replacement LCs. Under the Term
Loan, interest will be payable in arrears on the unpaid principal
amount of the Term Loan at a rate per annum equal to the sum of
(a) 8% payable-in-kind quarterly and (b) at the Debtors' election:
(x) the greater of (i) LIBOR or (ii) 3.00%, and in the case of
either (i) or (ii), plus 6.00% or (y) the Base Rate plus 5.00%, in
each case, payable in cash monthly.
A letter of credit facility fee will be payable quarterly in
arrears on (a) the aggregate amount of credit-linked deposits at a
rate per annum equal to 6.125% payable in cash and (b) the
aggregate amount of letters of credit outstanding under the LC
Facility at a rate per annum equal to 8.00% payable-in-kind in the
form of PIK Notes.
Interest will be payable on any loans deemed made by Secured
Lenders under the LC Facility as a result of drawn letters of
credit reimbursed with credit-linked deposits at a rate per annum
equal to the sum of (a) the greater of (i) LIBOR or (ii) 3.00%,
and in the case of either (i) or (ii), plus 6.00% payable in cash
and (b) 8.00% payable-in-kind in the form of PIK Notes. A "PIK
Note" shall mean a note with the same maturity date as the LC
Facility and with interest payable quarterly at a rate per annum
equal to 8% payable-in-kind.
From and after the occurrence of a payment or bankruptcy event of
default, or, at the election of the Agent at the direction of
steering committee, any other event of default, all amounts under
the definitive documentation will bear interest at the applicable
interest rate plus 2% per annum and any letter of credit fees
shall be increased by 2% per annum.
The Exit Facility contemplates customary affirmative, negative and
financial covenants binding on Reorganized BE. Specifically, the
financial covenants will be tested monthly through Dec. 31, 2009,
and tested quarterly thereafter including, without limitation: (i)
maximum ratios of total debt to EBITDAR; (ii) minimum EBITDAR; and
(iii) minimum liquidity.
The Exit Facility will mature 36 months after the Effective Date.
The Post- Emergence LCs, the Replacement LCs, and any LC Loans
deemed made as a consequence of a draw upon a Post-Emergence LC or
a Replacement LC, will be secured by a first priority security
interest in all assets of Reorganized BE, including, without
limitation, all deposit and bank accounts wherever located,
together with a pledge of all stock of Parent,
BearingPoint and each of its direct and indirect domestic
subsidiaries that a pledge of the Additional Foreign Stock would
not cause a material adverse effect on the Debtors; provided
further, that the First Lien LC Facility shall not include:
i) any Drawn Pre-Filing Date LCs;
ii) any letter of credit issued after the Effective Date to
replace a Pre-Filing Date LC, if such Pre-Filing Date LC
contains an "evergreen" renewal provision and the issuer
thereof has not renewed such Pre-Filing Date LC pursuant
to such provision; and
iii) any Pre-Filing Date LCs or any other obligations under the
LC Facility.
The Second Lien LC Facility shall be pari passu with the Term
Loan. The Term Loan and the Second Lien LC Facility will be
secured by a second priority security interest in the Collateral,
second in priority only to the liens securing the First Lien LC
Facility.
Additionally, from and after the Effective Date, all intercompany
advances by a loan party shall be reflected through the issuance
of secured intercompany notes, which notes, to the extent legally
and practically possible shall be pledged to the Agent, on behalf
of itself and the Secured Lenders, in each case subject to
exceptions and limitations to be agreed upon. Such intercompany
notes will be pledged as part of the Collateral through perfected
control account agreements and local pledges in compliance with
the laws of the relevant foreign jurisdictions.
The agent, on behalf of the Secured Lenders under the First Lien
LC Facility, shall reallocate to the Secured Lenders under the
Term Loan an amount equal to 50% of the PIK Compensation received
by such Secured Lenders under the First Lien LC Facility.
The Exit Facility will also be subject to customary and standard
mandatory prepayments, including but not limited to the following:
i) 100% of the net cash proceeds of asset sales and
extraordinary receipts;
ii) 100% of the net cash proceeds of issuances or placements
of equity and debt and
iii) 65% of Excess Cash, adjusted for any net cash proceeds
from asset sales or debt or equity issuances and debt
repayments.
The availability of the Exit Facility will be conditioned upon the
satisfaction of conditions precedent usual and customary for
financings of this kind, and such other conditions deemed
by Agent and the Secured Lenders to be appropriate for the
transaction, including, without limitation:
i) occurrence of the Effective Date;
ii) the issuance of an opinion by the DCAA that contains no
adverse opinion with respect to the Debtors; and
iii) the return of amounts in the Credit-Linked Deposit
Account in excess of amounts under the LC Facility to the
Secured Lenders under the Prepetition Letter of Credit
Facility.
The Exit Facility will have customary events of default for
facilities.
A full-text copy of the Debtors' amended joint Chapter 11 plan of
reorganization is available at:
http://ResearchArchives.com/t/s?3a0f
A full-text copy of the Debtors' amended disclosure statement is
available at:
http://ResearchArchives.com/t/s?3a10
A full-text copy of the Debtors' blacklined amended joint Chapter
11 plan of reorganization is available at:
http://ResearchArchives.com/t/s?3a11
A full-text copy of the Debtors' blacklined amended disclosure
statement is available at:
http://ResearchArchives.com/t/s?3a10
A full-text copy of the Debtors' joint Chapter 11 plan of
reorganization is available at:
http://ResearchArchives.com/t/s?3a0e
A full-text copy of the Debtors' disclosure statement is available
at:
http://ResearchArchives.com/t/s?3a0f
BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently
one of the world's largest providers of management and technology
consulting services to Global 2000 companies and government
organizations in more than 60 countries worldwide. Based in
McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP -
- has approximately 15,000 employees focusing on the Public
Services, Commercial Services and Financial Services industries.
BearingPoint professionals have built a reputation for knowing
what it takes to help clients achieve their goals, and working
closely with them to get the job done. The Company's service
offerings are designed to help clients generate revenue, increase
cost-effectiveness, manage regulatory compliance, integrate
information and transition to "next-generation" technology.
BearingPoint, Inc. fka KPMG Consulting, Inc., together with its
units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D.
N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal
& Manges LLP, has been tapped as counsel. Greenhill & Co., LLC,
and AP Services LLC, have also been tapped as advisors. Davis
Polk & Wardell is special corporate counsel. BearingPoint
disclosed total assets of $1,762,689,000, and debts of
$2,231,839,000 as of Sept. 30, 2008.
Contemporaneous with their bankruptcy petitions, the Debtors filed
a pre-packaged Joint Plan of Reorganization to implement the terms
of their agreement with the secured lenders. Under the Plan, the
Debtors propose to exchange general unsecured claims for equity in
the reorganized company. Existing shareholders are out of the
money. The Plan and the explanatory disclosure statement remain
subject to approval by the Bankruptcy Court.
BEARINGPOINT INC: U.S. Trustee Forms Seven-Member Creditors Panel
-----------------------------------------------------------------
Diana G. Adams, the United States Trustee for Region 2, appointed
seven creditors to serve on an Official Committee of Unsecured
Creditors of BearingPoint Inc. and its debtor-affiliates.
The members of the Committee are:
1) AT&T
One AT&T Way, Room 3A218
Bedminster, NJ 07921
Attn: James W. Grudus, Esq.
James.Grudus@att.com
Tel: (908) 234-3318
Fax: (832) 213-0157
2) The Bank of New York Mellon
101 Barclay Street
New York, NY 10286
Attn: David M. Kerr
david.m.kerr@bnymellon.com
Tel: (212) 815-5650
Fax: (732) 667-9322
3) Federal Management Systems, Inc.
462 K Street, NW
Washington, DC 20001
Attn: Aubrey A. Stephenson
Tel: (202) 842-3003
4) Friedman Fleischer & Lowe
Capital Partners II, L.P.
c/o Friedman Fleischer & Lowe, LLC
One Maritime Plaza, Suite 2200
San Francisco, CA 94111
Attn: Christopher A. Masto
contact@FFLPartners.com
Tel: (415) 402-2132
Fax: (415) 402-2111
5) Law Debenture Trust Company of New York
400 Madison Ave.
New York, NY
Att: Robert Bice
Tel: (646) 747-1254
Fax: (212) 750-1361
6) Plainfield Special Situations
Master Fund Ltd.
c/o Plainfield Asset Management LLC
55 Railroad Avenue
Greenwich, CT 06830
Attn: Robert Friend
bob.friend@pfam.com
Tel: (203) 302-1763
Fax: (203) 302-1779
7) York Capital Management
767 Fifth Ave., 17th Floor
New York, NY 10153
Attn: Charles Hale
chale@yorkcapital.com
Tel: (212) 300-1300
Fax: (212) 300-1301
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About BearingPoint Inc.
BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently
one of the world's largest providers of management and technology
consulting services to Global 2000 companies and government
organizations in more than 60 countries worldwide. Based in
McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP
-- has approximately 15,000 employees focusing on the Public
Services, Commercial Services and Financial Services industries.
BearingPoint professionals have built a reputation for knowing
what it takes to help clients achieve their goals, and working
closely with them to get the job done. The Company's service
offerings are designed to help clients generate revenue, increase
cost-effectiveness, manage regulatory compliance, integrate
information and transition to "next-generation" technology.
BearingPoint, Inc. fka KPMG Consulting, Inc., together with its
units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D.
N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal
& Manges LLP, has been tapped as counsel. Greenhill & Co., LLC,
and AP Services LLC, have also been tapped as advisors. Davis
Polk & Wardell is special corporate counsel. BearingPoint
disclosed total assets of $1,762,689,000, and debts of
$2,231,839,000 as of Sept. 30, 2008.
Contemporaneous with their bankruptcy petitions, the Debtors filed
a pre-packaged Joint Plan of Reorganization to implement the terms
of their agreement with the secured lenders. Under the Plan, the
Debtors propose to exchange general unsecured claims for equity in
the reorganized company. Existing shareholders are out of the
money. The Plan and the explanatory disclosure statement remain
subject to approval by the Bankruptcy Court.
BEARINGPOINT INC: Wants to Hire Allen & Overy as Special Counsel
----------------------------------------------------------------
BearingPoint, Inc., and its affiliates seek authority from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Allen & Overy LLP as special government contracts and
litigation counsel.
Allen & Overy will provide advice and representation in connection
with the Debtors' business, including various regulatory and
compliance matters, the corporate structure of the Debtors'
European business, the incentives and labor law arrangements of
certain of the Debtors' operating companies and certain on-going
advice to the Debtors including governance and administrative
issues related thereto.
In addition, Allen & Overy will provide legal services in the
jurisdiction in which the Debtors operate, including, but not
limited to, England, Germany, the Netherlands, France and Japan.
The Debtors relate that Allen & Overy will not act as bankruptcy
counsel for the Debtors or represent the Debtors in the
administration of their chapter 11 cases. The Debtors do not
anticipate any duplication of the services to be rendered to them
by Allen & Overy and the services rendered and to be rendered by
the Debtors' bankruptcy counsel, Weil, Gotshal & Manges LLP, or
any of the Debtors' other bankruptcy, special or otherwise
retained professionals in these bankruptcy cases.
Edward G. Barnett, a partner of Allen & Overy, tells the Court
that Allen & Overy will be paid for services rendered in these
Chapter 11 cases based on its hourly rates subject to a monthly
retainer of GBP25,000.
The hourly rates of Allen & Overy professionals, on a by
location basis, are:
International International
Title UK (GBP) (US $) (EUR)
----- -------- ------------- ------------
Partner/Counsel 536 - 630 743 - 878 351 - 792
Senior Associate 473 - 504 509 - 765 351 - 698
Associate 266 - 446 315 - 675 171 - 585
Trainee/Paralegal 167 189 - 293 83 - 248
Mr. Barnett assures the Court that Allen & Overy is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Barnett can be reached at:
Allen & Overy LLP
1221 Avenue of the Americas
New York, NY 10020
Tel: +1 212 610 6300
Fax: +1 212 610 6399
About BearingPoint Inc.
BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently
one of the world's largest providers of management and technology
consulting services to Global 2000 companies and government
organizations in more than 60 countries worldwide. Based in
McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP
-- has approximately 15,000 employees focusing on the Public
Services, Commercial Services and Financial Services industries.
BearingPoint professionals have built a reputation for knowing
what it takes to help clients achieve their goals, and working
closely with them to get the job done. The Company's service
offerings are designed to help clients generate revenue, increase
cost-effectiveness, manage regulatory compliance, integrate
information and transition to "next-generation" technology.
BearingPoint, Inc. fka KPMG Consulting, Inc., together with its
units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D.
N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal
& Manges LLP, has been tapped as counsel. Greenhill & Co., LLC,
and AP Services LLC, have also been tapped as advisors. Davis
Polk & Wardell is special corporate counsel. BearingPoint
disclosed total assets of $1,762,689,000, and debts of
$2,231,839,000 as of Sept. 30, 2008.
Contemporaneous with their bankruptcy petitions, the Debtors filed
a pre-packaged Joint Plan of Reorganization under Chapter to
implement the terms of their agreement with the secured lenders.
Under the Plan, the Debtors propose to exchange general unsecured
claims for equity in the reorganized company. Existing
shareholders are out of the money. The Plan and the explanatory
disclosure statement remain subject to approval by the Bankruptcy
Court.
BEAZER HOMES: S&P Lowers Credit Rating to CCC+/Negative
-------------------------------------------------------
According to Bloomberg's Bill Rochelle, Beazer Homes USA Inc. was
downgraded March 3 by Standard & Poor's for the third time in
slightly more than a year. S&P downgraded Beazer's credit rating
to CCC+/Negative/.
Instrument Rating
--------- ------
US$180 mil 4.625% convertible sr notes due 6/15/2024 5, CCC
US$200 mil 8.625% Sr Unsecd nts due 2011 5, CCC
US$200 million 6.5% Sr Unsecd notes due 11/15/2013 5, CCC
According to Mr. Rochelle, the new corporate rating is down one
more grade to CCC+ in view of the risk that operating cash flow
may turn negative.
Atlanta-based Beazer reported a net loss of $80.3 million for the
quarter ended in December on revenue of $232 million. For the
fiscal year ended Sept. 30, the net loss was $952 million on
revenue of $2.1 billion. Beazer operates in 21 states.
Beazer Homes is among the 10 largest homebuilders in the U.S.
BELO CORPORATION: Fitch Downgrades Issuer Default Rating to 'BB-'
-----------------------------------------------------------------
Fitch Ratings has taken these rating actions on Belo Corporation:
-- Issuer Default Rating downgraded to 'BB-' from 'BB';
-- Guaranteed Bank facility upgraded to 'BB+' from 'BB';
-- Senior unsecured notes/bonds downgraded to 'B+' from 'BB'.
The Rating Outlook is Negative.
The downgrade of the IDR and Negative Outlook reflect the
continued weak macro-economic environment impacting local media.
The upgrade of the bank facility reflects the announced amendment
to Belo's bank credit agreement which provides a guarantee from
material domestic subsidiaries. The banks will have guarantees
from subsidiaries that in total meet a threshold of 90% of total
revenue, asset or EBITDA. The downgrade of the senior unsecured
notes/bonds reflects the priority provided by the guarantee to the
banks in the event of liquidation or restructuring.
The bank amendment also provides financial covenant flexibility as
the maximum leverage ratio has been increased from 5.0 times (x)
to 6.25x, stepping down to 6.0x on July 1, 2010, 5.75x on Sept.
30, 2010 and 5.0x on Dec. 31, 2010. The minimum interest coverage
ratio has been reduced from 2.5x to 2.25x, stepping up to 2.5x on
April 1, 2010. The amended bank facility adjusts a restricted
payments basket that should result in a reduction or suspension of
the existing dividend which Fitch would expect to be used for debt
reduction.
The ratings continue to be supported by Belo's strong local
presence in the top-50 U.S. markets and top network affiliations.
Fitch continues to believe that there is an overcapacity of
premium-priced media outlets in most mid-to-major markets. In
Fitch's view the lower rated stations that are unable to
sufficiently aggregate the local market audiences will bear a
disproportionate share of pressure. Belo maintains strong network
affiliations and has a track record of making investments in its
news infrastructure, which has positioned it to have either the
No.1 or No.2 station in most of its markets. As such, Fitch would
expect Belo to compete effectively with newspapers and radio for
local ad dollars over the intermediate term. Newspapers in some
of Belo's television markets (Seattle, Tucson) have already
announced expected closings this year.
Belo does not have any material maturities until its bank facility
comes due June 2011. The company currently has approximately $400
million drawn under the $550 million facility. With the
elimination of the dividend, Fitch believe it will be possible for
Belo to materially reduce this balance by its maturity. Fitch
believes Belo's liquidity is sufficient as there are no material
working capital uses and Fitch does not anticipate the company
will burn cash in 2009.
BERNARD L. MADOFF: Fairfield Sues KPMG Over Madoff Losses
---------------------------------------------------------
According to Bloomberg's Erik Larson, the fourth-largest U.S.
accounting firm KPMG LLP and investment adviser NEPC LLC were sued
for as much as $42 million by the town of Fairfield, Connecticut,
over claims they failed to prevent the town's retirement fund from
falling victim to Bernard Madoff's alleged Ponzi scheme.
The town alleged in a complaint that KPMG and NEPC didn't perform
proper due diligence on Madoff invested hedge funds that held
retirement money for 1,500 current and former Fairfield workers.
As cited by the Bloomberg report, Fairfield asserted, "Had
defendant NEPC performed reasonable due diligence on Madoff in
2006, it would have determined that the performance history of
Madoff and AMBMF could not be reasonably verified" and wasn't "a
suitable investment.
Bloomberg relates that auditors, banks and other third parties
have been criticized and sued by victims over claims they failed
to uncover Madoff's suspected fraud. NEPC, based in Cambridge,
Massachusetts, started advising Fairfield's retirement fund in
2006, when the town was already invested in a so-called Madoff
feeder fund, American Masters Broad Market Fund, according to the
complaint. NEPC allegedly signed off on that investment.
Fairfield's lawyer, David Golub, Esq., said that the town, whose
retired and disabled firefighters and police officers are among
the victims of Madoff's alleged scam, invested a principal amount
of $15 million. The report quotes Mr. Golub as saying: "The town
relied upon professionals to advise and protect the retirement
fund's interests. Those professionals are liable if they didn't do
their jobs properly. The town seeks to recover its losses."
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The estimated
losses from Madoff's fraud were allegedly at least
$50 billion.
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
District Court for the Southern District of New York granted the
application of the Securities Investor Protection Corporation for
a decree adjudicating that the customers of BLMIS are in need of
the protection afforded by the Securities Investor Protection Act
of 1970. Irving H. Picard, Esq., was appointed as trustee for the
liquidation of BLMIS, and Baker & Hostetler LLP was appointed as
counsel.
BERNARD L. MADOFF: UK Unit Sent $164-Mil. to Parent in November
---------------------------------------------------------------
Madoff Securities International Ltd., Bernard L. Madoff's London-
based proprietary trading unit, transferred $164 million to its
New York-based parent in November, David Glovin and Edvard
Pettersson at Bloomberg reports, citing the receiver.
Lee Richards, a court-appointed receiver of Madoff's firm, didn't
say why the trading unit made two transfers totaling $164 million
to Bernard L. Madoff Investment Securities LLC. He said the
transfer has "greatly reduced the assets held by" Madoff
Securities International.
Bloomberg relates that Mr. Richards took control of Madoff's firm
in December, after the money manager was arrested by the FBI and
sued by regulators for what they said was a $50 billion fraud.
In a report submitted to U.S. District Judge Louis Stanton in New
York, the receiver said he was unable to identify the assets held
by Madoff's London operation, as the judge had requested. The
only significant transaction identified in the report is the
$164 million transfer, Mr. Richards adds.
According to the report, Mr. Richards also asked the judge to
terminate the receivership because his role has been assumed by
federal prosecutors, a U.S. bankruptcy trustee and the U.K.
liquidators. He said the U.K. liquidators have refused to provide
him with documents he needs to complete his job and adds, "It is
plain that the receiver cannot discharge his courtordered duties
and there is no reason for the receiver to continue this
assignment".
In his report Mr. Richards further disclosed that Madoff
Securities International and a dormant entity, Madoff Ltd.,
"appear" to be the only non-U.S. Madoff-related companies. He said
that Madoff Securities International had no clients and served
only as a proprietary trading business and that the U.K.
liquidators may learn of other assets after the prime broker for
Madoff Securities International winds down open trades and
provides a full accounting of its transactions.
In addition to Madoff Securities International accounts at its
prime broker, the firm "holds accounts at other financial
institutions, although we do not know whether any funds remain in
those accounts. The information we have received has been
extremely limited" Bloomberg quoted Mr. Richards as saying. He
interviewed 68 Madoff employees as part of his investigation and
identified other organizations including Cohmad Securities, a
broker dealer that operated out of Madoff's offices in Manhattan.
Separately, Irving Picard, which has been appointed liquidation
trustee for BLMIS, is seeking to liquidate Madoff's brokerage,
find assets and distribute them to Madoff's customers. So far,
Mr. Picard and attorneys from the law firm Baker Hostetler LLP
have found about $950 million in cash and securities.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The estimated
losses from Madoff's fraud were allegedly at least
$50 billion.
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
District Court for the Southern District of New York granted the
application of the Securities Investor Protection Corporation for
a decree adjudicating that the customers of BLMIS are in need of
the protection afforded by the Securities Investor Protection Act
of 1970. Irving H. Picard, Esq., was appointed as trustee for the
liquidation of BLMIS, and Baker & Hostetler LLP was appointed as
counsel.
BETTER BEDDING: Files for Chapter 11 Bankruptcy, Closes 11 Stores
-----------------------------------------------------------------
Janice Podsada at The Hartford Courant reports that Better Bedding
Shops Inc. has filed for Chapter 11 bankruptcy protection.
According to The Hartford Courant, Better Bedding closed 11 of its
21 stores in Connecticut, Springfield, and Westfield on March 3.
About 15 workers were laid off, the report says, citing Better
Bedding President Tom Wholley. Better Bedding, according to the
report, is closing stores in:
-- East Hartford,
-- North Haven,
-- Torrington,
-- Waterbury,
-- Bristol,
-- West Hartford,
-- Branford,
-- Ansonia, and
-- Putnam.
Mr. Wholley, according to The Hartford Courant, said that Better
Bedding will deliver orders currently on deposit at all locations
despite the closures. The Holyoke store will remain open, The
Hartford Courant states, citing Mr. Wholley.
The Hartford Courant relates that Mr. Wholley blamed Better
Bedding's bankruptcy on the economic downturn, saying, "Our fixed
expenses have gone up and are sales have gone down. Sales have
been down over 20 percent the last few months. Buying a mattress
is a postpone-able item. It's not like a broken appliance you
have to replace. It's a purchase you can postpone."
Court documents say that Better Bedding listed $1 million to
$10 million in assets, $1 million to $10 million in debts, and
more than 100 creditors. The Hartford Courant relates that the
Company's unsecured creditors include:
-- Sealy Mattress Co., which holds a $1.1 million claim;
-- Simmons Co., which is owed $346,000;
-- Serta Mattress Co., which holds a $157,000 claim;
-- New Haven Register, which is owed $77,401; and
-- The Hartford Courant.
Beter Bedding Shops Inc. was founded in East Hartford in 1976 by
John T. Wholley Sr.
BIOPURE CORPORATION: Cash to Last Into April; Mulls Options
-----------------------------------------------------------
Biopure Corporation in its amended annual report on Form 10-K said
that its cash on hand and anticipated revenue are only sufficient
to last into April 2009.
"Unless the Company obtains financing imminently, it will be
forced to cease operations, liquidate its assets, and possibly
seek bankruptcy protection."
Given this need for capital, the Company said it is seeking new
funding and minimizing cash outflow. It has taken steps to reduce
administrative, sales, marketing and clinical spending, including
reducing headcount. Additionally, it is exploring strategic
alternatives, including monetizing selected assets and a sale of
all assets to protect the interests of its stockholders, creditors
and other stakeholders.
The Company said that the development and regulatory processes for
seeking and obtaining regulatory approval to market Hemopure has
been and will continue to be costly. Substantial working capital
will be needed to develop, manufacture and sell Hemopure and to
finance operations until such time, if ever, as it can generate
positive cash flow.
"If additional financing is not available when needed, the Company
will be unable to successfully develop or commercialize Hemopure
or to continue to operate. A sustained period in which financing
is not available could force the Company to go out of business and
liquidate its assets. If the U.S. Navy does not continue its
development of Hemopure for a trauma indication, the Company will
likely cease development of Hemopure for that indication because
of limited resources."
The Company disclosed a net loss of $20,282,000 on revenues of
$3,128,000 for its fiscal year ended Oct. 31, 2008, compared with
a net loss of $36,282,000 on $2,556,000 of revenues during the
prior fiscal year. The Company disclosed assets of $9,977,000 and
stockholders' equity of $6,388,000 as of Oct. 31, 2008.
The Form 10-K/A can be accessed at:
http://researcharchives.com/t/s?3a13
About Biopure Corporation
Biopure Corporation develops pharmaceuticals, called oxygen
therapeutics, that are intravenously administered to deliver
oxygen to the body's tissues. The Company was founded in 1984,
and is headquartered and owns a manufacturing facility in
Cambridge, Massachusetts.
In 2008 for financial reasons, the Company effected reductions in
force and shut down its manufacturing facility in Cambridge and
its processing facility in Pennsylvania. By November 2008, nearly
all of its employees were laid off. The Company has continued
limited operations since then and reemployed some personnel for
specific activities. It is also seeking funding to continue in
business.
BOYD GAMING: Fitch Downgrades Issuer Default Rating to 'B+'
-----------------------------------------------------------
Fitch Ratings has downgraded Boyd Gaming's credit ratings:
-- Issuer Default Rating to 'B+' from 'BB-';
-- Senior credit facility to 'BB-/RR3' from 'BB';
-- Senior subordinated debt to 'B-/RR6' from 'B+'.
The Rating Outlook is Negative. The downgrade is based on Fitch's
expectation of continued operating pressure, primarily in the Las
Vegas Locals market, in 2009-2010.
Last week, Boyd reported fourth quarter 2008 (Q4'08) adjusted
EBITDA of $94.1 million, or a 30% year-over-year decline, as the
U.S. recession deepened and consumers significantly pulled back
discretionary spending. Fitch expects the operating pressure to
continue in 2009, and is particularly concerned that the demand
pressure from the weak Las Vegas Local economy will be exacerbated
by supply increases. The Las Vegas Locals market accounts for
roughly 50% of the company's wholly owned adjusted property
EBITDA, and Boyd's EBITDA from properties in that market declined
40% in Q4'08. Fitch believes substantial profit declines in that
market are likely to continue for at least the next few quarters.
Following Boyd's credit-positive announcement last year that it
would mothball the Echelon project, Fitch affirmed Boyd's previous
'BB-' IDR and Fitch maintained the IDR as the operating
environment weakened over the last six months. That view was
based on the company's solid liquidity profile, and the
expectation that the company would be able to use its free cash
flow to reduce debt in 2009-2010, resulting in sustainable
leverage below 6 times (x). The 'B+' IDR incorporates Fitch's
view that the continued weak Las Vegas Locals market will impact
Boyd's free cash flow generation, resulting in leverage that is
likely to remain solidly above 6x through 2010.
As of Dec, 31, 2008, Boyd's leverage was 5.65x, approaching the
6.0x covenant in its credit facility. However, since the credit
facility was sized to accommodate the development of Echelon, the
covenant increases to 6.5x as of March 31, 2009 through the end of
the year, before expanding to 7.5x in 2010. Even if the operating
environment deteriorates further and maintaining covenant
compliance becomes more challenging, Fitch believes that the
company would not have difficulty negotiating waivers or amending
the facility given Boyd's free cash flow profile, debt maturity
schedule, and limited leverage through the credit facility.
However, the quality of EBITDA for compliance under the covenant
has deteriorated, in Fitch's view. Boyd's credit facility
agreement allows the company to include operating income from the
50%-owned Borgata, the cash distributions of which are currently
limited. Borgata's cash dividends are limited to tax
distributions when the JV credit facility leverage is above 3.0x,
and it was 3.7x-3.8x as of year-end 2008. Fitch believes
significant operating pressure will continue in Atlantic City in
2009-2010, which will continue to limit cash distributions from
Borgata. Boyd's parent company credit facility agreement also
allows the inclusion of gains on the early retirement of debt.
This could give the company some cushion to manage within bank
facility covenants in 2009-2010, should Boyd choose to repurchase
more debt. However, the gains will eventually roll off after four
quarters in the calculation.
Boyd's 'B+' IDR continues to be supported by its solid liquidity
profile due to a modest capital spending outlook, ample
availability on its $4 billion revolving credit facility,
comfortable interest coverage, and no debt maturities until 2012.
Although overall operating pressure is negative, relative property
performance in 2009 will benefit from the recent completion of
capital investments at Blue Chip in Indiana and the Borgata in
Atlantic City, the anniversary of the Illinois smoking ban, and
relatively stronger regional performance in Louisiana. Longer
term, Boyd's IDR is supported by its sizable and somewhat
diversified portfolio of assets, successful operating history, and
solid management.
As Fitch noted last week, Boyd's ratings are unaffected by the
announcement that the company is interested in exploring an
acquisition of certain assets of Station Casinos, Inc. (see
release dated Feb. 24, 2008). The announcement was a preliminary
indication of interest, so there is no binding agreement at this
time. If details of the terms regarding a formal transaction
materialize, Fitch will consider the impact on Boyd's ratings at
that time.
These considerations could result in a further downgrade of Boyd's
IDR:
-- Economic trends point to a deeper and more prolonged
recession than Fitch's current expectation;
-- An expectation that the impact of supply growth in the LV
Locals market on Boyd's properties is greater than expected;
-- Boyd's 2009 quarterly trends reflect adjusted EBITDA
declines of 25% or more;
-- As visibility with respect to the 2010 operating environment
increases, an expectation that 2010 adjusted EBITDA would
decline further from 2009 levels;
-- Adjusted leverage approaches the 6.5x leverage covenant;
-- Boyd enters into a binding agreement to acquire Station's
assets and Fitch determines it would have an adverse credit
impact.
These considerations could result in an Outlook revision to
Stable:
-- The recession shows signs of stabilization around mid year
to Q3'09;
-- Boyd's 2009 quarterly trends reflect flat adjusted EBITDA;
-- Adjusted leverage is expected to sustain below 6.0x;
-- As visibility with respect to the 2010 operating environment
increases, an expectation that 2010 adjusted EBITDA would
grow;
-- Boyd enters into a binding agreement to acquire Station's
assets and Fitch determines it would have a positive credit
impact.
In accordance with Fitch's Recovery Rating methodology, Fitch has
instituted Recovery Ratings because of the IDR downgrade to 'B+'.
While concepts of Fitch's RR methodology are considered for all
companies, explicit recovery ratings are assigned only to those
companies with an IDR of 'B+' or below. At the lower IDR levels,
Fitch believes there is greater probability of default so the
impact of potential recovery prospects on issue-specific ratings
becomes more meaningful and is more explicitly reflected in the
ratings dispersion relative to the IDR. As a result, Fitch has
taken these rating actions:
-- Fitch downgraded Boyd's credit facility to 'BB-/RR3' from
'BB', reflecting a 1-notch positive differential from Boyd's
'B+' IDR, as Fitch estimates recovery in the 51%-70% range.
Fitch's recovery analysis typically assumes a fully drawn
revolver, which would be $4 billion in Boyd's case. However,
Fitch does not believe that assumption is appropriate.
Therefore, Fitch's recovery analysis for Boyd assumes the
revolver is drawn to roughly $2.6 billion.
-- Fitch downgraded Boyd's subordinated debt to 'B-/RR6' from
'B+', reflecting a 2-notch negative differential from Boyd's
'B+' IDR, as Fitch estimates little to no recovery in the
0%-10% range.
BRIAN TUTTLE: Exclusive Plan Filing Period Extended to June 12
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida
extended Brian R. Tuttle, Merja A. Tuttle, Tuttle Land Holding
Corp., and TLH-Bos Corp.'s exclusive period to file a plan to
June 12, 2009, and their exclusive period to solicit acceptances
of that plan to August 11.
In papers filed with the Court, the Debtors stated that they need
to finish the development and entitlement of the Sasasota, Florida
property owned by Northport Land, which will bring millions of
dollars into the estate to pay all of the Debtors' creditors.
TLH-BOS Corp. owns a 60% interest in Northpoint Land.
Brian R. Tuttle and Merja A. Tuttle of West Palm Beach, Florida,
are real estate developers. They filed for chapter 11 bankruptcy
on October 15, 2008, before the U.S. Bankruptcy Court for the
Southern District of Florida (Case No. 08-25253). Debtor-
affiliates that filed separate Chapter 11 petitions are Tuttle
Land Holding Corp. (Case No. 08-25255) and TLH-BOS Corp.
(Case No. 08-25256). Judge Paul G. Hyman Jr. presides over the
case. Robert C. Furr, Esq., and Alvin S. Goldstein, Esq., at Furr
& Cohen, represent the Debtors as counsel. In their schedules,
the Debtors listed total assets of $69,338,910 and total debts of
$23,605,666.
On Oct. 15, 2008, the Tuttles filed with the Court a Chapter 11
statement of current monthly income, disclosing $18,333 in total
current monthly income, including $14,000 net monthly income from
business operations.
BROADSTRIPE LLC: Files Schedules of Assets and Liabilities
----------------------------------------------------------
Broadstripe LLC filed with the U.S. Bankruptcy Court for the
District of Delaware its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ------------ -------------
A. Real Property $1,027,336
B. Personal Property $249,023,430
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $283,263,903
E. Creditors Holding
Unsecured Priority
Claims $541,511
F. Creditors Holding
Unsecured Non-priority
Claims $19,834,094
----------- ------------
TOTAL $250,050,766 $303,639,508
A full-text copy of the Debtor's schedules of assets and
liabilities is available at:
http://ResearchArchives.com/t/s?3a0d
Headquartered in Chesterfield, Missouri, Broadstripe LLC --
http://www.broadstripe.com-- provide videos and telephone
services to consumers and business in Maryland, Michigan,
Washington and Oregon. The company and fives of its affiliates
filed for Chapter 11 protection on January 2, 2009 (Bankr. D. Del.
Lead Case No. 09-10006). Ashby & Geddes, and Gardere Wynne Sewell
LLP represent the Debtors in their restructuring efforts. The
Debtors proposed FTI Consulting Inc. as their restructuring
consultant, and Epiq Bankruptcy Consultants LLC as their claims
agent. obert A. DeAngelis, the United States Trustee for Region
3, appointed six creditors to serve on an official committee of
unsecured creditors. When the Debtors filed for protection from
their creditors, they listed assets and debts between
$100 million and $500 million in their filing.
BULLION RIVER: Files Chapter 11 Petition in Sacramento
------------------------------------------------------
Bullion River Gold Corp. filed for Chapter 11 on Feb. 27 before
the U.S. Bankruptcy Court for the Eastern District of California.
The Company listed assets of $4.3 million and debt of $14.8
million on June 30, Bloomberg's Bill Rochelle said.
French Gulch, California-based Bullion River Gold Corp. is in the
business of prospecting and mining gold in the western U.S.
Bullion River Gold Corp. (OTCBB:BLRV) announced on November 14,
2008, that it has filed a Form 15 with the Securities and Exchange
Commission suspending its reporting obligations under the
Securities Exchange Act of 1934. Upon the filing of the Form 15,
the Company's obligation to file current and periodic reports were
suspended until total assets exceed $10 million and shareholders
of record exceed 500. In addition, the company's common stock
will cease trading on the OTC Bulletin Board. Due to the high
cost of compliance under the securities laws, rules and
regulations applicable to public companies, including the
Sarbanes-Oxley Act of 2002, the Company's board of directors
determined that it could no longer afford to remain a public
company.
CALDWELL ACQUISITIONS I: Voluntary Chapter 11 Case Summary
----------------------------------------------------------
Debtor: Caldwell Acquisitions I, LLC
c/o Max Miller
9746 South Park Circle
Fairfax Station, VA 22039
Bankruptcy Case No.: 09-11423
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
Eastern District of Virginia (Alexandria)
Debtor's Counsel: Richard J. Stahl
Stahl Zelloe, P.C.
11350 Random Hills, Road, Suite 700
Fairfax, VA 22030
Tel: (703) 691-4940
Fax: (703) 691-4942
Email: r.stahl@stahlzelloe.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Max Miller, president & CEO of the
Company.
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/vaeb09-11423.pdf
CAPMARK FINANCE: Fitch Downgrades Servicer Ratings on Three CMBS
----------------------------------------------------------------
Fitch Ratings downgrades Capmark Finance Inc.'s commercial
mortgage-backed securities servicer ratings:
-- Primary servicer rating to 'CPS2-' from 'CPS1-';
-- Master servicer rating to 'CMS3-' from 'CMS1-';
-- Special servicer rating to 'CSS2-' from 'CSS1'.
In addition, all Capmark Finance Inc. CMBS servicer ratings are
placed on Rating Watch Negative.
The rating actions follow Fitch's recent downgrade and placement
on Rating Watch Negative of Capmark's parent company, Capmark
Financial Group, to 'B-' from 'BBB-'.
Fitch is concerned with Capmark's ability to operate as a CMBS
servicer, including retaining adequate staff and meeting it's
advancing obligations. Fitch will continue to closely monitor the
financial condition of Capmark Financial Group and the operational
performance of Capmark and will take ratings actions or provide
further commentary, as necessary. Fitch deems the master servicer
rating of 'CMS3-' on Rating Watch Negative sufficient to meet the
minimum requirements for current Pooling and Servicing Agreements
which it services. A downgrade below this level would necessitate
a transfer of servicing due to the advancing obligations of the
master servicer.
As of Dec. 31, 2008, Capmark's total primary servicing portfolio
was comprised of 34,040 loans with an unpaid principal balance of
$250.8 billion, of which 17,659 loans totaling $136.6 billion were
in 295 CMBS transactions. The company was named special servicer
on 116 CMBS transactions with an outstanding balance of $49.2
billion, actively specially servicing 150 CMBS loans totaling
$1.07 billion, and managing 43 CMBS real estate owned properties
valued at $267 million.
CARAUSTAR INDUSTRIES: Moody's Cuts Corp. Family Rating to 'Caa2'
----------------------------------------------------------------
Moody's Investors Service downgraded Caraustar Industries, Inc.'s
Corporate Family Rating to Caa2 from Caa1 and the Probability of
Default Rating to Caa3 from Caa1. Concurrently, the ratings on
the senior unsecured notes were lowered to Caa3 from Caa2 and the
outlook was changed to negative from stable.
The downgrade and negative outlook reflect the increasingly higher
probability of default on the $190 million senior unsecured notes
due June 1, 2009, as the maturity date becomes more imminent.
Given the current turmoil in the credit markets, refinancing the
2009 Notes by the maturity date remains a challenge. Caraustar
recently announced it has terminated efforts to sell the Recovered
Fiber Group, which it had been marketing as part of its plan to
repay the 2009 Notes. The company has further confirmed that it
is in negotiations with an ad hoc committee of the 2009 and 2010
noteholders. A situation in which noteholders receive less than
full value in a distressed scenario could be considered a default
under Moody's definition.
While the PDR was lowered two notches to Caa3 from Caa1, the CFR
and notes ratings were each lowered one notch due to Moody's
assessment of a higher than average expected family recovery rate.
In July 2008, Caraustar sold its interest in a joint venture that
resulted in the repayment and termination of its senior secured
term loan and repayment of the outstanding revolver balance. The
revolver balance remained at $0 at December 31, 2008, and the cash
balance was $35.5 million. Furthermore, the face value of the
revolver has been lowered from $100 million to $70 million through
two recent amendments. Thus, there is less possible debt in the
capital structure ahead of the notes, giving them a potentially
higher than average recovery rate in a distress scenario.
Moody's downgraded these ratings:
-- $190 million senior unsecured notes due 2009, to Caa3 (LGD3,
49%) from Caa2 (LGD4, 69%)
-- $29 million senior unsecured notes due 2010, to Caa3 (LGD3,
49%) from Caa2 (LGD4, 69%)
-- Corporate Family Rating, to Caa2 from Caa1
-- Probability of Default Rating, to Caa3 from Caa1
Caraustar Industries, Inc., headquartered in Austell, Georgia, is
an integrated manufacturer of recycled paperboard and converted
paperboard products. The company generated revenues of
$820 million in the year ended December 31, 2008.
* * *
Caraustar Industries, an investment-grade credit eight years ago,
is facing the prospect of a Chapter 11 reorganization or a
distressed tender offer, with $190 million of senior notes
maturing June 1, Bloomberg's Bill Rochelle says, moting of Moody's
statement that refinancing Caraustar's debt remains a "challenge".
CHEVY CHASE: Moody's Upgrades Long-Term Deposit and Debt Ratings
----------------------------------------------------------------
Moody's Investors Service upgraded the long- and short-term
deposit and debt ratings of Chevy Chase Bank, F. S. B., and
continued the review of its bank financial strength rating for
possible upgrade. Chevy Chase's long- and short-term deposit
ratings were upgraded to A2/Prime-1 from Baa2/Prime-2, its issuer
rating to A2 from Baa2, and its subordinate debt rating to A3 from
Baa3. Its bank financial strength rating will remain at C- until
the review for possible upgrade is completed. The negative
outlook on the deposit and debt ratings was maintained.
Moody's said that the action to upgrade Chevy Chase's deposit and
debt ratings and continue the review of its bank financial
strength rating is in response to the February 27, 2009
announcement by Capital One Corporation that it had completed its
acquisition of Chevy Chase from B.F. Saul Real Estate Investment
Trust. The rating agency added the upgrade of Chevy Chase's
deposit and debt ratings aligns them with those of Capital One
Bank, and reflects the benefit accruing to Chevy Chase from
becoming part of a stronger, more diversified organization.
The continuation of the negative outlook on Chevy Chase's deposit
and debt ratings leaves the outlook identical to that on Capital
One.
Upgrades:
Issuer: Chevy Chase Bank F.S.B.
-- Issuer Rating, Upgraded to A2 from Baa2
-- OSO Rating, Upgraded to P-1 from P-2
-- Deposit Rating, Upgraded to P-1 from P-2
-- OSO Senior Unsecured OSO Rating, Upgraded to A2 from Baa2
-- Subordinate Regular Bond/Debenture, Upgraded to A3 from Baa3
-- Senior Unsecured Deposit Rating, Upgraded to A2 from Baa2
Issuer: Chevy Chase Preferred Capital Corporation
-- Preferred Stock Preferred Stock, Upgraded to Baa1 from Ba1
On Review for Possible Upgrade:
Issuer: Chevy Chase Bank F.S.B.
-- Bank Financial Strength Rating, Placed on Review for Possible
Upgrade, currently C-
Outlook Actions:
Issuer: Chevy Chase Bank F.S.B.
-- Outlook, Changed To Negative(m) From Rating Under Review
Issuer: Chevy Chase Preferred Capital Corporation
-- Outlook, Changed To Negative From Rating Under Review
The last rating action on Chevy Chase was taken on December 4,
2008, when all its ratings were put on review for possible
upgrade.
Chevy Chase Bank, F. S. B., the principal subsidiary of B. F. Saul
Real Estate Investment Trust until its sale to Capital One,
reported assets of $15.5 billion as of September 2008. Capital
One Financial Corporation, headquartered in McLean, Virginia
reported total assets of $166 billion as of December 2008.
CHRISTIAN KNUDSEN: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Christian S. Knudsen, Jr.
14825 Sapling Way
Glenelg, MD 21737
Bankruptcy Case No.: 09-13170
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
District of Maryland (Baltimore)
Judge: James F. Schneider
Debtor's Counsel: Jeffrey M. Sirody
Sirody, Freiman & Feldman
1777 Reisterstown Road, Suite 360 E
Baltimore, MD 21208
Tel: (410) 415-0445
Fax: (410) 415-0744
Email: smeyers5@hotmail.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/mdb09-13170.pdf
CHRYSLER LLC: Retail Sales Dropped 26% to 66,658 Units in February
------------------------------------------------------------------
Chrysler LLC reported February U.S. retail sales of 66,658 units,
a 26% decrease versus 2008; while the total retail industry was
down a projected 35%. Chrysler retail industry market share
increased to 11.0% versus prior 9.6% in February 2008 or an
improvement of 1.4 percentage points. Total February 2009 U.S.
sales include a fleet reduction of 71% year-over-year for the same
period, furthering Chrysler's focus on emphasizing retail over
fleet.
"We see our retail number as a shining light of positive news,"
said Jim Press President and Vice Chairperson of Chrysler LLC.
"By working together with our strong dealer body, we will continue
to move the needle on sales and service. Additionally, our focus
on quality is evident in the 2009 Dodge Ram, which continues to
demonstrate our ability to improve the quality of our products.
Recently reported data is not representative of the positive
progress Chrysler has made over the last year. In the last 12
months, our corporate warranty claim rates are down over 30%."
Press added that even though Chrysler is seeing a firming of
retail demand, the overall economy is still being influenced by
the lack of available credit for consumers. "The Chrysler
Financial TARP fund loan of $1.5 billion has started to provide
positive traction in the marketplace," he said.
"During this important historical time, we are making strong
progress as we move forward with our stakeholders to continue the
restructuring of our Company," said Press. "We have a special
bond with the American people now and pledge to continue our
efforts to deliver the best quality, better fuel efficiency and
the best value in the marketplace."
February Sales Highlights
* Chrysler LLC retail sales (excluding fleet) increased 26%
over January, while retail industry was up 17%
* Chrysler ranked second in retail among the Detroit three
* With best-in-class fuel economy, sales of Dodge Journey
continued to grow as sales reached 4,615 units
* Sales of the Dodge Challenger (3,283 units) continue to
accelerate, and set a new monthly record
* Rock-solid Jeep(R) Wrangler sales increased 28% (9,088
units) compared to February 2008
"The availability of consumer credit from Chrysler Financial along
with a consistent promotional message and advertising share of
voice influenced the improvement in our February retail sales,"
said Steven Landry, Executive Vice President, Sales and Marketing,
Service and Parts. "Overall our retail sales position in February
can be attributed to an increase in awareness of our Employee
Pricing Plus Plus program. It truly gives our dealers a message
that resonates with consumers. We will continue this program in
March. In addition, March is Dodge truck month, and we will add
the availability of "no charge HEMI(R)" on the Ram 1500."
March Incentives
In March, Chrysler LLC begins Dodge truck month by delivering the
award-winning 5.7-liter HEMI engine at no charge on the Dodge Ram
1500. The "no charge HEMI" option is worth up to $1,200 to
customers, and is available in conjunction with the Employee
Pricing Plus Plus program for 2008 and 2009 model year vehicles.
Continuing through March 31, Chrysler LLC's Employee Pricing Plus
Plus program offers the employee price to all customers purchasing
or leasing a new 2008 or 2009 Chrysler, Jeep or Dodge vehicle. In
addition to the employee price, customers are eligible for cash
discounts of up to $3,500 for 2009 model year vehicles and up to
$6,000 on 2008 model year vehicles. Plus qualified customers can
obtain zero% financing for up to 36 months through Chrysler
Financial.
Chrysler LLC's total February U.S. sales were 84,050 units
(including fleet), a decrease of 44%. As evidence of the
Company's continuing support of its dealers, it has reduced floor
planning costs and inventory, keeping inventory fresh for
customers. The Company finished the month with 350,966 units
representing a 100 day supply. With the lowest level of inventory
of its domestic competitors, total inventory is down 20% compared
with February 2008 when it totaled 436,399 units.
Chrysler LLC U.S. Sales Summary Through February 2009
Month Sales Vol %
Model Curr Yr Pr Yr Change
----- ------- ----- ------
Sebring 1,448 11,056 -87%
300 2,778 9,207 -70%
Crossfire 52 148 -65%
PT Cruiser 1,218 5,537 -78%
Aspen 1,582 2,879 -45%
Pacifica 342 930 -63%
Town & Country 8,099 11,952 -32%
CHRYSLER BRAND 15,519 41,709 -63%
-------------- ------ ------ ---
Compass 923 2,879 -68%
Patriot 2,161 5,195 -58%
Wrangler 9,088 7,088 28%
Liberty 4,066 7,350 -45%
Grand Cherokee 4,725 7,163 -34%
Commander 978 2,568 -62%
JEEP BRAND 21,941 32,243 -32%
---------- ------ ------ ---
Caliber 2,519 10,937 -77%
Avenger 1,931 8,306 -77%
Charger 6,703 9,750 -31%
Challenger 3,283 0 0%
Viper 47 90 -48%
Magnum 24 1,862 -99%
Dakota 1,334 2,617 -49%
Ram P/U 14,448 22,642 -36%
Journey 4,615 742 522%
Caravan 9,003 11,072 -19%
Durango 511 2,734 -81%
Nitro 1,794 4,255 -58%
Sprinter 378 1,134 -67%
DODGE BRAND 46,590 76,141 -39%
----------- ------ ------ ---
TOTAL CHRYSLER LLC 84,050 150,093 -44%
TOTAL CAR 18,786 51,499 -64%
TOTAL TRUCK 65,264 98,594 -34%
--------------------- ------ ------ ---
Selling Days 24 25
------------ -- --
Sales CYTD Vol %
Model Curr Yr Pr Yr Change
----- ------- ----- ------
Sebring 3,391 20,234 -83%
300 5,028 16,957 -70%
Crossfire 95 272 -65%
PT Cruiser 2,165 10,299 -79%
Aspen 2,468 5,449 -55%
Pacifica 666 1,827 -64%
Town & Country 12,391 21,043 -41%
CHRYSLER BRAND 26,204 76,081 -66%
-------------- ------ ------ ---
Compass 1,742 5,564 -69%
Patriot 4,275 9,684 -56%
Wrangler 15,450 13,225 17%
Liberty 7,409 15,681 -53%
Grand Cherokee 7,849 14,991 -48%
Commander 2,050 6,234 -67%
JEEP BRAND 38,775 65,379 -41%
---------- ------ ------ ---
Caliber 4,919 21,822 -77%
Avenger 4,102 15,491 -74%
Charger 10,731 17,722 -39%
Challenger 6,040 0 0%
Viper 174 163 7%
Magnum 51 4,204 -99%
Dakota 2,793 4,693 -40%
Ram P/U 27,291 42,544 -36%
Journey 7,707 742 939%
Caravan 12,222 19,167 -36%
Durango 1,013 6,567 -85%
Nitro 3,324 10,374 -68%
Sprinter 861 2,536 -66%
DODGE BRAND 81,228 146,025 -44%
----------- ------ ------- ---
TOTAL CHRYSLER LLC 146,207 287,485 -49%
TOTAL CAR 34,533 97,262 -64%
TOTAL TRUCK 111,674 190,223 -41%
--------------------- ------- ------- ---
Selling Days 50 50
------------ -- --
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital Management
LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles
and products. The company has dealers worldwide, including
Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil,
Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 3, 2008,
Dominion Bond Rating Service downgraded the ratings of Chrysler
LLC, including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
CITIGROUP INC: Launches Program to Let Jobless Pay Less
-------------------------------------------------------
Citigroup disclosed the Homeowner Unemployment Assist, a new
initiative that will help recently unemployed, delinquent
CitiMortgage customers stay in their homes by paying a reduced
monthly mortgage payment for three months. The Homeowner
Unemployment Assist program is a new component of Citigroup
Homeowner Assistance, the company's multi-faceted program to help
people avoid foreclosure and stay in their homes. Borrowers with
first mortgages whose loans are owned and serviced by
CitiMortgage, and who meet certain other criteria, are eligible to
participate in the new program.
Sanjiv Das, CEO of CitiMortgage, said, "Unemployment is a major
concern facing the American economy right now, and it especially
worries mortgage holders. We understand the emotional and
financial trauma that can occur when homeowners lose their jobs,
and families are forced to downsize to a smaller space and move
away from their neighborhoods and schools because they can no
longer afford their mortgage payments. Our Homeowner Unemployment
Assist program is intended to serve as a bridge toward a longer-
term solution, helping homeowners stay in their homes and in their
communities while they get their feet back on the ground. The
Homeowner Unemployment Assist program is just one of a variety of
innovative ways in which Citigroup is helping distressed
borrowers, and also presents anticipated bottom line savings for
Citigroup in the form of reduced credit losses, which is a win-win
situation for our shareholders and our mortgage holders."
Beginning March 3, CitiMortgage customers meeting certain criteria
who have recently lost their jobs will be eligible to participate
in the Homeowner Unemployment Assist program. Often when families
lose their homes, they are forced to downsize to a one- to two-
bedroom rental residence. Under the Homeowner Unemployment Assist
program, Citigroup will lower required monthly mortgage payments
for the majority of qualifying customers to an average of $500 for
three months. $500 is below the cost of the nationwide average
rent for a one-bedroom residence.1
As part of the Homeowner Unemployment Assist program, Citigroup
will remain in contact with customers during the three-month
period in an effort to sustain an ongoing dialogue while customers
work toward long-term employment solutions. If the customer is
not employed within three months, Citigroup will work with
customers on a case-by-case basis to explore the best solutions
for the customer. Those borrowers who do find employment during
that period can resume their original monthly payments or if
eligible, receive a long-term loan modification under Citigroup's
streamlined program adopted from the FDIC.
Citigroup anticipates that thousands of homeowners may be eligible
to participate in the Homeowner Unemployment Assist program over
the next two years, if they choose to do so. In addition,
following evaluation of initial results, Citigroup will consider
expanding the program to include borrowers at earlier stages of
delinquency or who are current on their loans, as appropriate.
Qualifying customers are CitiMortgage customers who have
temporarily and involuntarily lost their jobs and who also meet
the following criteria:
-- Have a first mortgage loan that is:
-- Owned and serviced by CitiMortgage, Inc.;
-- Conforming to government sponsored enterprise (GSE)
limits at the time of origination;
-- For the principal residence of the customer;
-- Are 60 days or more delinquent on their mortgage or in
foreclosure;
-- Have sufficient funds to make the reduced payment;
-- Meet all insurer or guaranty requirements; and
-- Are not eligible to participate in the FDIC's long-term
Modification program, which has been adopted by Citigroup.
New Initiative Builds on Citigroup's Long-Standing Foreclosure
Prevention Efforts
As a new component of Citigroup Homeowner Assistance, the new
Homeowner Unemployment Assist initiative builds on Citigroup's
long-standing commitment to finding ways to help distressed
borrowers maintain homeownership. Last year, Citigroup's
foreclosure prevention efforts helped approximately four out of
five borrowers with mortgages serviced by Citigroup stay in their
homes. This new initiative is designed to help those in the
remaining twenty percent who may have no other options available
because they have lost their jobs.
Citigroup continues to reach out to families and individuals who
may be experiencing some form of economic distress despite being
current on their mortgage payments. In addition, Citigroup
recently finalized an agreement with the FDIC to adopt its
streamlined loan modification program.
Citigroup initiated a temporary foreclosure moratorium on all
Citigroup owned first mortgage loans that are the principal
residence of the customer as well as all loans Citigroup services
where we have reached an understanding with the investor. The
moratorium was effective February 12, 2009, and will extend until
March 12, 2009, before which time finalized details are expected
of President Barack Obama's loan modification program. The
company will not initiate or complete any new foreclosures on
eligible customers during this time.
This expands on Citigroup's ongoing foreclosure moratorium in
which Citigroup does not initiate or complete a foreclosure sale
on any eligible borrower where Citigroup owns the mortgage, the
borrower is seeking to stay in the home, which is his or her
primary residence, is working in good faith with Citigroup and has
sufficient income for affordable mortgage payments.
CitiMortgage has worked with investors and owners of more than 90
percent of the 4.3 million mortgages it services -- but does not
own -- to make sure that many more qualified borrowers can also
receive the benefits of this moratorium. In early 2007, Citigroup
created the Office of Homeownership Preservation to work with
counselors and borrowers to find alternatives to foreclosure
whenever possible.
Since the start of the housing crisis in 2007, Citigroup has
helped approximately 440,000 homeowners, whose combined mortgages
total approximately $43 billion, to avoid potential foreclosure.
For more information about the program, customers may call 1-800-
283-7918 or click on www.mortgagehelp.citi.com.
Enhanced Treasury Analytics Service to Help Clients Address
Regulatory Reporting Requirements of FAS 157
Citigroup it has enhanced its custody and investor services
capabilities with new online reporting functionality to help
clients address the regulatory reporting requirements of the
Financial Accounting Standards Board (FASB) issued Statement 157
(FAS 157).
These new enhancements increase transparency and allow clients to
manage their portfolio holdings more efficiently than before. The
enhancements include addressing the fair value requirements for
investments and generating disclosures with greater control and
detail than previously offered in the market. As a part of this
upgrade, Treasury Analytics reports generate required FAS 157
disclosures and integrate FAS 157 with daily compliance, risk,
accounting and performance reporting in an automated and auditable
process.
Treasury Analytics is an investment analytics reporting tool that
offers integrated reporting on risk, compliance, accounting and
performance measures across a portfolio of investments. Providing
data critical for management oversight and risk mitigation, this
service is key to treasurers, and portfolio managers in managing
assets, fulfilling regulatory reporting requirements and
addressing fiduciary responsibilities while providing executive,
compliance/audit and board reporting at a moment's notice.
Treasury Analytics is available through Citi's web portal,
CitiDirect for Securities, and can be coupled with other services
for investor and corporate clients.
"Our clients are being challenged to do more with fewer resources,
especially in terms of fulfilling reporting requirements and
fiduciary responsibilities, such as in the case of FAS 157," said
Craig Dudsak, Global Custody North America Region Head, Citi. "And
these new services provide them with comprehensive insights into
and greater oversight across their portfolios. We look forward to
helping our clients meet the needs of an ever changing
marketplace."
About Citigroup Homeowner Assistance
Citigroup Homeowner Assistance is a multi-faceted program
encompassing the company's efforts to help people avoid
foreclosure and stay in their homes. Citigroup has launched
initiatives addressing homeowners at all stages -- from those who
are current on their payments but may face economic distress, to
borrowers who have fallen behind on their payments -- to provide
assistance. The company is using a variety of means to help
homeowners, including a specially trained servicing unit to work
with homeowners to find long-term solutions; a continuous
evaluation of portfolios to identify those borrowers who can save
money and reduce monthly payments; adoption of the FDIC's
streamlined long-term modification program; and partnering with
community and nonprofit partners through the company's Office of
Homeownership and Office of Financial Education to offer free
services to borrowers and training to counselors.
About Citigroup
Based in New York, Citigroup (NYSE: C) -- http://www.citigroup.com
-- is organized into four major segments -- Consumer Banking,
Global Cards, Institutional Clients Group, and Global Wealth
Management. Citigroup had $2.0 trillion in total assets on $1.9
trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
CONSECO INC: Fitch Downgrades Issuer Default Rating to 'B+'
-----------------------------------------------------------
Fitch Ratings has downgraded all the ratings assigned to Conseco
Inc. and its subsidiaries one notch. The ratings are also placed
on Watch Negative.
The downgrades reflect the company's decreased financial
flexibility due to lower than anticipated company performance
versus its secured bank facility financial covenants. The
covenants of immediate concern are those related to statutory
capital and risk based capital ratios. The actual results at
year-end 2008 were negatively impacted by investment portfolio
losses and changes in the risk based capital mortgage experience
factor, partially offset by positive statutory operating income,
company capital actions, and a state permitted statutory practice
related to deferred taxes that increased surplus. As a result,
the cushion for several key financial covenants was narrower at
year-end 2008 than expected. Fitch expects investment
deterioration to continue to occur in 2009, given the challenging
investment environment.
The Watch Negative reflects the company's statement that its
auditors were considering inclusion of an explanatory paragraph in
its opinion on Conseco's audited financial statements regarding
the company's ability to continue as a going concern. Inclusion
of such a paragraph would be considered a covenant violation under
Conseco's secured credit agreement.
The future of Conseco's ratings and resolution of their Watch
status will be based investment results, the company's ability to
improve its financial profile, and the final disposition of the
financial statement issue. Fitch notes that the company is
currently working on various initiatives to improve statutory
capital. Fitch also expects continuation of the progress the
company has made in improving operating performance in its
business lines.
Fitch downgrades these with a Watch Negative:
Conseco, Inc.
-- Issuer Default Rating to 'B+' from 'BB-';
-- Senior secured bank credit facility to 'B+/RR4' from 'BB-';
-- Senior unsecured debt to 'B-/RR6' from 'B'.
Bankers Life and Casualty Company
-- Insurer financial strength rating to 'BBB-' from 'BBB'.
Conseco Life Insurance Company
Bankers Conseco Life Insurance Company
Conseco Insurance Company
Conseco Health Insurance Company
Colonial Penn Life Insurance Company
Washington National Insurance Company
-- IFS rating to 'BB+' from 'BBB-'.
CONSECO INC: Moody's Downgrades Insurance Strength Rating to Ba2
----------------------------------------------------------------
Moody's Investors Service has downgraded the insurance financial
strength rating of Conseco, Inc.'s life insurance subsidiaries to
Ba2 from Ba1, its bank debt rating to Caa1 from B2 and the rating
on the company's senior convertible debentures to Caa3 from B3.
The outlook on Conseco and its subsidiaries is negative.
The rating action follows the announcement by Conseco that it
might obtain a qualified opinion from its auditors due to concerns
about the company's status as a going concern. If such a
statement is included, unless waived by lenders, it would result
in a default under the Company's senior bank credit facility.
According to Scott Robinson, Moody's Vice President and Senior
Credit Officer, "Our rating action was largely predicated on
deterioration in the company's financial flexibility and the
increased possibility of a holding company default over the near
to medium term". Robinson added, "Financial flexibility is
pressured over the near term by tight bank covenants, and over the
medium term, by approximately $300 million of senior convertible
debt that is putable to the company in 2010". Pressure on capital
adequacy, potentially driven by investment losses, may diminish
the capacity of the operating companies to send dividends up to
the holding company.
The rating agency said that the negative outlook reflects: 1)
potential further investment losses and their adverse impact on
capital levels at the insurance companies and on financial
covenants related to the company's senior credit facility, and 2)
the ability of Conseco to obtain an unqualified audit opinion from
their independent registered public accounting firm and the terms
and ramifications of any potential waiver provided by lenders to
prevent a default.
Mr. Robinson noted, "The one-notch widening between the holding
company debt ratings and the IFS rating of the insurance
subsidiaries reflects the relatively weaker position of debt
holders at the holding company as compared with policyholders at
the insurance companies, which has worsened given the constrained
financial flexibility of the holding company." The widening of
the notching between the bank debt and the senior convertible
debentures reflects the better position of the bank debt holders
in case there is a breach of a covenant. Moody's believes that a
waiver provided by holders of the bank debt could come at an
increased cost to holders of senior convertibles debentures.
Conseco recently reported preliminary 2008 year end net operating
earnings before net realized investment losses of $156 million, up
from a $74 million in the same period one year ago. Net realized
losses were $88 million for the 4th quarter.
Moody's said that these could change the rating back to stable: an
unqualified opinion provided by the company's auditor for
consolidated financial statements as of December 31, 2008; the
absence of material "one-time" earnings charges; annual run-rate
consolidated statutory EBIT of at least $150 million; and an NAIC
RBC ratio on a consolidated basis above 300%. Conversely, the
following would place downward pressure on the ratings: a
qualified opinion provided by the company's auditor for
consolidated financial statements as of December 31, 2008;
adjusted GAAP EBIT coverage of below two times; annual run-rate
consolidated statutory EBIT below $125 million; or cash at the
holding company of less than $50 million.
Moody's has downgraded these ratings, with a negative outlook:
* Conseco, Inc. -- senior secured bank debt to Caa1 from B2;
senior unsecured convertible debentures to Caa3 from B3;
* Bankers Life and Casualty Company -- insurance financial
strength rating to Ba2 from Ba1;
* Conseco Insurance Company -- insurance financial strength
rating to Ba2 from Ba1;
* Colonial Penn Life Insurance Company -- insurance financial
strength rating to Ba2 from Ba1;
* Conseco Health Insurance Company -- insurance financial
strength rating to Ba2 from Ba1;
* Conseco Life Insurance Company -- insurance financial strength
rating to Ba2 from Ba1;
* Washington National Insurance Company -- insurance financial
strength rating to Ba2 from Ba1.
Conseco is a specialized financial services holding company that
operates primarily in the life and health insurance sectors
through its subsidiaries. As of December 31, 2008, Conseco
reported preliminary total shareholders' equity of $1.7 billion.
The last rating action on Conseco took place on December 19, 2008,
when Moody's downgraded the bank debt and senior convertible
debentures of Conseco to B2 and B3, respectively, from B1 and B2.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to pay punctually senior
policyholder claims and obligations.
CONTINENTALAFA DISPENSING: Panel Taps RubinBrown as Fin'l Advisors
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Missouri has
granted the official committee of unsecured creditors of
ContinentalAFA Dispensing Company, et al., permission to employ
RubinBrown LLP as its financial advisors.
As the Committee's financial advisors, RubinBrown LLP will perform
these professional services:
(a) analyze the Debtors' business, assets, and transactions,
and review valuations;
(b) review documentation related to claims held by various
groups of creditors;
(c) review the Debtors' financial reports, analyses, and
projections, and provide advice to the Committee; and
(d) review the Debtors' Chapter 11 plan or other disposition of
the Debtors' assets and liabilities.
RubinBrown's professional fees range from $125 per hour to $440
per hour, plus customary expenses.
Michael T. Lewis, a partner at RubinBrown, tells the Court that
the firm neither holds nor represents any interest adverse to the
Debtors, and is a "disinterested person" within the meaning of
Sec. 101(14) of the Bankruptcy Code.
About ContinentalAFA Dispensing
ContinentalAFA Dispensing Company, fka Indesco International, Inc.
-- http://www.continentalafa.com/-- headquartered in St. Peters,
Missouri, designs, manufactures and supplies high quality plastic
trigger sprayers and other liquid dispensing technologies and
systems for major consumer product companies and industrial
markets. The Debtors currently have no business operations.
Continental AFA and its wholly owned subsidiaries, Continental
Sprayers International, Inc. and AFA Products, Inc., filed
separate voluntary Chapter 11 petition in the Eastern District of
Missouri United States Bankruptcy Court on Aug. 7, 2008 (Case No.
08-45921). Judge Kathy A. Surratt-States oversees the case.
John J. Hall, Esq., and Lawrence E. Parres, Esq., at Lewis, Rice &
Fingersh, L.C., represents the Debtor. Daniel D. Doyle, Esq., and
David Michael Brown, Esq., at Spencer Fane Britt & Browne LLP,
represent the Committee as counsel. When they filed for
bankruptcy, the Debtors listed $100,000,000 to $500,000,000; and
estimated debts of $10,000,000 to $50,000,000.
COUNTRYWIDE FINANCIAL: Loan to Former Fannie Mae CEO Questioned
---------------------------------------------------------------
Former Fannie Mae CEO Franklin Raines may have received a
discounted loan from Countrywide Financial Corp., although
Mr. Raines told a House panel in December 2008 that he hadn't
received preferential treatment, Glenn R. Simpson at The Wall
Street Journal reports.
A senior House Republican released documents and a letter on
Wednesday that Rep. Darrell Issa said "suggest Mr. Raines knew he
was being afforded special VIP benefits" including discounted
mortgage loans by Countrywide Financial, WSJ relates. According
to WSJ, Rep. Issa said in a letter to Kevin Downey, a lawyer for
Mr. Raines, that the documents appear to contradict Mr. Raines'
December 8 statement to the panel that he was "unaware of any
special treatment."
Mr. Raines received loans from Countrywide Financial under a
program for friends of that company's chairperson, WSJ relates.
Mr. Issa's office released on Wednesday copies of documents
related to a June 2003 mortgage granted to Mr. Raines. Citing Mr.
Issa, WSJ states that the documents indicate that Mr. Raines
received a one-percentage-point discount on his mortgage, arranged
by an official of Countrywide Financial.
According to WSJ, Countrywide Financial sold billions of dollars
of home loans to Fannie Mae and many of which have defaulted, WSJ
says.
WSJ relates that Mr. Downey wrote to Mr. Issa, saying that none of
the documents "support the inference that Mr. Raines was
receiving, and knew that he was receiving, an inappropriately
discounted loan from Countrywide."
According to WSJ, Countrywide sold billions of dollars of home
loans to Fannie Mae and many of which have defaulted, WSJ says.
Fannie Mae was put into government conservatorship, states the
report.
About Countrywide Financial
Based in Calabasas, California, Countrywide Financial Corporation
(NYSE: CFC) -- http://www.countrywide.com/-- is a diversified
financial services provider and a member of the S&P 500, Forbes
2000 and Fortune 500. Through its family of companies,
Countrywide originates, purchases, securitizes, sells, and
services residential and commercial loans; provides loan closing
services such as credit reports, appraisals and flood
determinations; offers banking services which include depository
and home loan products; conducts fixed income securities
underwriting and trading activities; provides property, life and
casualty insurance; and manages a captive mortgage reinsurance
company.
As reported by the Troubled Company Reporter, Bank of America
closed its purchase of Countrywide Financial for $2.5 billion on
July 1, 2008. The mortgage lender was originally priced at
$4 billion, but the purchase price eventually was whittled down to
$2.5 billion based on BofA's stock prices that fell over 40% since
the time it agreed to buy the ailing lender.
CREST 2002-IG: Fitch Downgrades Ratings on Class D Notes to 'B+'
----------------------------------------------------------------
Fitch Ratings has downgraded three and affirmed one class of notes
issued by Crest 2002-IG, Ltd. In addition, the notes have been
assigned a Stable Outlook. These rating actions are effective
immediately:
-- $309,080,739 Class A affirmed at 'AAA';
-- $78,000,000 Class B downgraded to 'AA' from 'AAA';
-- $40,304,905 Class C downgraded to 'BBB' from 'AA-';
-- $14,332,500 Class D downgraded to 'B+' from 'BB+'.
Fitch does not rate the Preferred shares.
These rating actions reflect Fitch's view on industry and vintage
concentration risks outlined in its revised Structured Finance CDO
rating criteria released Dec. 16, 2008. All classes were assigned
Stable Outlooks reflecting Fitch's expectation that the ratings
will remain stable over the next one to two years.
Crest 2002-IG is a collateralized debt obligation, which closed on
May 16, 2002, that is supported by a static pool of commercial
mortgage backed securities (71.5%) and senior unsecured real
estate investment trust (28.6%) securities. All of the assets
were originated prior to 2002 (Vintage 3). The transaction has
average diversity for CRE CDOs with 37 obligors. Approximately
3.2% of the current portfolio is rated below investment grade and
the weighted average rating factor has slightly worsened to 'A/A-'
from 'A+/A' at last review in April 2007. All collateral quality
tests have remained in compliance.
The rating on the class A notes addresses the likelihood that
investors will receive full and timely payments of interest, as
per the governing documents, as well as the stated balance of
principal by the legal final maturity date. The ratings on the
class B, C, and D notes address the likelihood that investors will
receive ultimate and compensating interest payments, as per the
governing documents, as well as the stated balance of principal by
the legal final maturity date.
Asset analysis was performed through Fitch's Portfolio Credit
Model. The liability analysis was performed through Fitch's
proprietary cash flow model customized to reflect the specific
structural features of the transaction, under various interest
rates and default timing stresses.
The rating actions resolve the 'Under Analysis' status issued on
Oct. 14, 2008 following Fitch's announcement of its proposed
criteria revision for analyzing structured finance CDOs. The
revised criteria report, 'Global Rating Criteria for Structured
Finance CDOs' was published in its final form on Dec. 16, 2008
along with an updated version of the Fitch Portfolio Credit Model
that includes additional functionality for analyzing SF CDOs. As
part of this review, Fitch evaluated the current credit quality of
the portfolio and made standard adjustments for any names on
Rating Watch Negative, reducing such ratings for default analysis
purposes by three notches.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
DEVELOPMENTAL LEARNING: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: Developmental Learning Center, Inc.
3808 Clarksville Highway
Nashville, TN 37218
Tel: (615) 333-3773
Fax: (615) 259-3455
Bankruptcy Case No.: 09-02151
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
Middle District of Tennessee (Nashville)
Company Description: The Developmental Learning Center, Inc.,
provides programs and services to meet the
special educational, mental, and physical
health needs of adolescents in Middle
Tennessee.
See: http://www.dlcnashville.org/academy.htm
Debtor's Counsel: Elliott Warner Jones
Drescher & Sharp PC
1720 West End Avenue, Suite 300
Nashville, TN 37203
Tel: (615) 425-7121
Fax: (615) 425-7111
Email: ejones@dsattorneys.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Dr. Ronald Eichler, executive director
of the company.
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/tnb09-02151.pdf
DOLE FOOD: Moody's Assigns 'B3' Rating on Proposed $325MM Bonds
---------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to the proposed new
$325 million 3rd lien bond to be issued by Dole Food Company, Inc.
Moody's affirmed Dole's existing ratings, including its corporate
family rating of B3 and its probability of default rating of Caa1.
The rating outlook is negative. Upon the successful conclusion of
the transaction under the terms currently contemplated, Moody's
will likely change the company's outlook to stable.
Rating assigned:
-- New $325 million senior secured 3rd lien debt due 2014 at B3
(LGD3, 38%)
Ratings affirmed, with certain LGD percentages adjusted:
Dole Food Company, Inc.:
-- Corporate family rating at B3
-- Probability of default rating at Caa1
-- Senior secured term loan B at Ba3 (LGD2); LGD percentage to
15% from 16%
-- Senior secured prefunded letter of credit facility, also
available to Solvest, at Ba3 (LGD2); LGD percentage to 15%
from 16%
-- Senior unsecured notes at Caa2; to LGD5/82% from LGD4/ 65%
-- Senior unsecured shelf, senior subordinated shelf and junior
subordinated shelf at (P)Caa3 (LGD6, 92%)
Solvest Ltd.
-- Senior secured term loan C at Ba3 (LGD2); LGD percentage to
15% from 16%
Proceeds from the new $325 million issue, along with borrowings
under Dole's 'ABL', will refinance the $345 million outstanding on
a senior unsecured bond due May 1, 2009. The new issue will be
secured by a 3rd lien on the domestic assets that are pledged to
the ABL and to the domestic term loans. The ABL retains a first
lien on domestic cash, receivables and inventory, and a second
lien on the assets that secure the Term Loan B and the prefunded
letter of credit facility. The Term Loan B retains a first lien
on the majority of Dole's domestic assets, except certain
principal properties, and a second lien on the ABL collateral.
The new 3rd lien debt will be guaranteed on a senior subordinated
basis by the domestic subsidiaries that guarantee Dole's domestic
bank facilities.
The affirmation of Dole's existing ratings is based on the
company's improved operating performance in fiscal 2008. Better
earnings from robust banana demand and prices and debt reductions
from asset sales have resulted in a decline in leverage, with debt
to EBITDA dropping from 9.4 times at the end of fiscal 2006 to 6.8
times for the twelve months ended October 4, 2008. Reported
EBITDA rose from $309 million in 2007 to $409 million in 2008.
Asset sale proceeds in fiscal 2008 totaled approximately $230
million. Dole owns attractive assets, such as land in Hawaii,
some of which are carried at historic values. The company is
monetizing non-core assets to improve what is still high leverage.
Moody's will likely reconsider the Caa1 probability of default
rating should operating performance be sustained at current
stronger levels, and should credit markets ease or Dole develop a
plan such that the refinancing of $400 million due in June 2010 is
fairly certain.
The negative rating outlook reflects Moody's concern about Dole's
ability to refinance the $345 million bond due on May 1, 2009,
given the difficult credit environment. The company's credit
ratios are not the reason for the negative outlook.
Moody's most recent rating action for Dole on November 13, 2008
changed the company's outlook to negative from stable, lowered its
probability of default rating and senior unsecured debt ratings,
and affirmed the company's B3 CFR and senior secured debt ratings.
Headquartered in Westlake Village, California, Dole Food Company,
Inc., is the world's largest producer of fresh fruit, fresh
vegetables and value-added fruits and vegetables. Sales for the
fiscal year ended January 3, 2009, were approximately
$7.6 billion.
ENTERPRISE RENT-A-CAR: Will Acquire Advantage's Assets for $19MM
----------------------------------------------------------------
Enterprise Rent-A-Car has reached an agreement to purchase certain
assets of Advantage Rent-A-Car for $19 million. The transaction
is subject to approval by the bankruptcy court, which may also
consider competing bids. If accepted, the transaction is expected
to close in April 2009.
The asset purchase agreement gives Enterprise the ability to close
or continue to operate any of Advantage's rental car facilities.
Currently, Advantage operates eight locations in four cities:
Denver, Orlando, Salt Lake City, and Phoenix. The transaction
also applies to certain other Advantage properties that recently
closed.
Upon the court's approval of the Enterprise purchase agreement,
Enterprise will take ownership of:
* the right to lease all or part or Advantage's rental
vehicle fleet;
* Advantage's customer lists;
* Advantage's Web address and toll-free reservation phone
lines;
* certain Advantage corporate accounts;
* Advantage Rent-A-Car trademark and copyright marks;
* Advantage Yellow Pages advertising; and
* Advantage trade secrets, know-how, and other intellectual
property.
Advantage Chairperson Dennis Hecker will enter into a consulting
agreement with Enterprise as part of the transaction. "We look
forward to working with Mr. Hecker in the coming years and to
serving the quality customer base he built at Advantage," said
Andrew Taylor, chairperson and chief executive officer of
Enterprise Rent-A-Car.
"I am excited by the sale of Advantage to Enterprise," said Mr.
Hecker. "I am confident that Advantage's loyal customers will
enjoy the great service and the expanded network of locations
offered by the Enterprise companies."
About Advantage Rent A Car
Advantage Rent A Car -- http://www.advantage.com-- is privately
held by Denny Hecker Family Ventures, with headquarter operations
in Minneapolis. Advantage serves travel and leisure, lifestyle,
business, government and insurance replacement rentals. The
Hecker group of companies include automobile dealerships, leasing,
daily automobile and motorcycle rental, commercial, and
residential real estate development, aviation, hospitality, and
technology.
Advantage Rent A Car filed for Chapter 11 protection in the
U.S. Bankruptcy Court for the District of Minnesota on December 8,
2008.
About the Enterprise Family of Companies
Headquartered in St. Louis, the Enterprise family of companies
operates Enterprise Rent-A-Car, National Car Rental, and Alamo
Rent A Car at more than 8,000 rental locations in neighborhoods
and at airports worldwide.
Enterprise Rent-A-Car Company --
http://www.enterprise.com/car_rental/home.do-- is a privately
held St. Louis, Missouri-based rental car company serving
customers in the U.S., Canada, Germany, Ireland, Puerto Rico, and
the U.K. They are also the owners of the Vanguard Automotive
Group, operator of National Car Rental and Alamo Rent A Car in
North America.
Enterprise Rent-A-Car is the largest rental car company in North
America, and has more than 6,900 offices.
As reported by the Troubled Company Reporter on January 30, 2009,
Avis Budget Group Inc., Hertz Global Holdings Inc., Enterprise
Rent-A-Car Co., and other rental car companies are asking the
Congress to let them use Troubled Asset Relief Program funds to
finance new auto purchases. Stagnant credit markets, declining
demand for travel, and the automobile industry's hardships have
made it hard for rental car companies to find buyers for their
used automobiles and secure financing to purchase new ones to
replace them.
EVERYTHING BUT WATER: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Everything But Water, LLC
7353 Greenbriar Parkway
Orlando, FL 32819
Tel: (407) 351-4069
Fax: (407) 351-0106
Bankruptcy Case No.: 09-10649
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Just Add Water, Inc. 09-10650
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Mary F. Walrath
Company Description: Everything But Water, LLC, owns and operates
a chain of women's swim and resort-wear
stores in the United States.
See: http://www.everythingbutwater.com/
Debtor's Counsel: Neil Raymond Lapinski
Rafael Xavier Zahralddin-Aravena
Elliott Greenleaf
1105 North Market Street, Suite 1700
Wilmington, DE 19899
Tel: (302) 384-9400
Fax: (302) 384-9399
Email: nrl@elliottgreenleaf.com
Estimated Assets: $50,001 to $100,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Sheila Arnold, president of the
company.
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
EXTRA ROOM: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Extra Room, Inc.
3800 West Moore Road
Tucson, AZ 85742
Bankruptcy Case No.: 09-03694
Chapter 11 Petition Date: March 3, 2009
Court: District of Arizona (Tucson)
Judge: Eileen W. Hollowell
Debtor's Counsel: Eric Slocum Sparks, Esq.
eric@ericslocumsparkspc.com
Eric Slocum Sparks PC
110 S Church Avenue #2270
Tucson, AZ 85701
Tel: (520) 623-8330
Fax: (520) 623-9157
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank of America Construction Loan $4,727,539
c/o James Ball Lot 31 Default &
Poli & Ball, PLC Demand for
2999 North 44th Street Repayment
Suite 500
Phoenix, AZ 85018
Extra Room/Stephen Phinny lawsuit v. $898,353
c/o Keller & Hickey Copeland Const.
2177 East Warner Rd. Suite 103 Damages Lot #31
Tempe, AZ 85284
Copeland Construction lawsuit case# $656,546
c/o Thompson & Krone, c2008 86641
PLC
4400 E. Broadway Blvd.,
Ste 602
Tucson, az 85711
Four Seasons Sunrooms $55,364
Liberty Savings Bank $49,667
HF Coors China $19,215
Mike Dowers Backhoe $18,901
Service, Inc.
Avitech Systems, Inc. $11,935
Beth Ford, County Treasurer $10,678
Extreme Integration $9,677
Natural Rock $8,806
Sculpture
Myrmo And Sons $7,594
Earthscapes Excavating $7,387
Tanque Verde Electric $5,727
Doors In Motion $4,238
Stephanie L. Fanos legal services $3,176
Schubardt & $2,350
Chamberlain
Service Master $2,000
Complete
Desert Marble $1,830
Restoration, Inc.
The Paint Kings, Inc. $1,350
The petition was signed by Stephen D. Phinny, president and chief
executive officer.
FANNIE MAE: Countrywide's Loan to Franklin Raines Questioned
------------------------------------------------------------
Former Fannie Mae CEO Franklin Raines may have received a
discounted loan from Countrywide Financial Corp., although Mr.
Raines told a House panel in December 2008 that he hadn't received
preferential treatment, Glenn R. Simpson at The Wall Street
Journal reports.
A senior House Republican released documents and a letter on
Wednesday that Rep. Darrell Issa said "suggest Mr. Raines knew he
was being afforded special VIP benefits" including discounted
mortgage loans by Countrywide Financial, WSJ relates. According
to WSJ, Rep. Issa said in a letter to Kevin Downey, a lawyer for
Mr. Raines, that the documents appear to contradict Mr. Raines'
December 8 statement to the panel that he was "unaware of any
special treatment."
Mr. Raines received loans from Countrywide Financial under a
program for friends of that company's chairperson, WSJ relates.
Mr. Issa's office released on Wednesday copies of documents
related to a June 2003 mortgage granted to Mr. Raines. Citing Mr.
Issa, WSJ states that the documents indicate that Mr. Raines
received a one-percentage-point discount on his mortgage, arranged
by an official of Countrywide Financial.
According to WSJ, Countrywide Financial sold billions of dollars
of home loans to Fannie Mae and many of which have defaulted, WSJ
says.
WSJ relates that Mr. Downey wrote to Mr. Issa, saying that none of
the documents "support the inference that Mr. Raines was
receiving, and knew that he was receiving, an inappropriately
discounted loan from Countrywide."
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FEDERAL FREIGHT: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Federal Freight, Inc.
319 Baylor Street, Suite 101
Texarkana, TX 75501
Tel: (903) 831-4666
Bankruptcy Case No.: 09-50043
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
Eastern District of Texas (Texarkana)
Company Description: The Debtor is a trucking operator.
Debtor's Counsel: David L. James
Miller James Miller & Hornsby LLP
1725 Galleria Oaks Drive
Texarkana, TX 75504-2044
Tel: (903) 794-2711
Email: jameslaw@cableone.net
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Gerald Ragle, president of the company.
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
FOOTHILLS RESOURCES: $2.5-Mil. DIP Loan From Regiment Approved
--------------------------------------------------------------
Foothills Resources Inc. won final approval from the U.S.
Bankruptcy Court for the District of Delaware to borrow
$2.5 million from Regiment Capital Special Situations Fund III LP,
Bloomberg's Bill Rochelle said.
On February 23, 2009, Foothills Resources, Inc., entered into the
DIP Credit Agreement with the lenders who are parties thereto,
Regiment Capital, L.P., as agent, and Foothills' wholly-owned
subsidiaries, Foothills California, Inc., Foothills Oklahoma,
Inc., and Foothills Texas, Inc., as guarantors, subject to final
approval by the Bankruptcy Court.
The DIP Credit Agreement provides for term loans of up to an
aggregate of $2.5 million. The proceeds of the Loans will be used
for working capital purposes, including the payment of fees,
costs, and expenses incurred in connection with the DIP Credit
Agreement and for expenditures consistent with a budget agreed
upon by the Company and the Lenders pursuant to the DIP Credit
Agreement. Interest will accrue under the DIP Credit Agreement at
12% per annum, provided however, following an event of default
under the DIP Credit Agreement, interest will accrue at an annual
rate equal to 2% above the annual rate otherwise applicable. The
Loans will mature on the earliest of:
(a) March 16, 2009, if the final order of the Bankruptcy Court
has not been entered on or prior to such date,
(b) May 19, 2009, if the final order of the Bankruptcy Court
has been entered on or prior to March 16, 2009,
(c) the date of substantial consummation of a plan or
reorganization in the Chapter 11 Cases that has been
confirmed by an order of the Bankruptcy Court,
(d) the date of a sale of substantially all of the assets of
the Company, and
(e) such earlier date on which all Loans and other obligations
for the payment of money will become due and payable in
accordance with the terms of the DIP Credit Agreement.
The obligations under the DIP Credit Agreement are secured,
subject to certain limited exceptions, by substantially all of the
assets of the Company and the Subsidiaries, including a super-
priority administrative expense claim pursuant to Bankruptcy Code
Section 364(c)(1).
A full-text copy of the DIP Credit Agreement is available for free
at http://researcharchives.com/t/s?39fd
About Foothills Resources
Foothills Resources, Inc., is an oil and gas exploration company
engaged in the acquisition, exploration and development of oil and
natural gas properties. The Company's operations are primarily
through its wholly owned subsidiaries, Foothills California, Inc.,
Foothills Texas, Inc. and Foothills Oklahoma, Inc.
On February 11, 2009, Foothills Resources, Inc. and its wholly
owned subsidiaries, Foothills California, Inc., Foothills
Oklahoma, Inc., and Foothills Texas, Inc., filed voluntary
petitions for reorganization relief under Chapter 11 (Bankr. D.
Del. Case No. 09-10453). Judge Christopher S. Sontchi handles
the Chapter 11 cases. The Debtors have tapped Akin Gump Strauss
Hauer & Feld LLP as lead bankruptcy counsel and Cole, Schotz,
Meisel, Forman & Leonard, as local counsel. The Garden City
Group Inc. is the Company's claims agent. In its bankruptcy
petition, Foothills estimated assets and debts of $50 million
to $100 million.
FORD MOTOR: Moody's Takes Rating Actions on Six Auto Loan Deals
---------------------------------------------------------------
Moody's has taken rating actions on six auto loan transactions
sponsored by Ford Motor Credit Company. Moody's has upgraded
eight subordinate tranches from five transactions issued in 2006
and downgraded two subordinate tranches from one transaction
issued in 2008. These rating actions were prompted by an
assessment of current enhancement levels relative to updated loss
expectations.
For the tranches upgraded, Moody's current loss expectations have
risen modestly from the initial expectation while enhancement for
these tranches has increased substantially since the securities
pay down sequentially. These transactions also benefited from
significant pay-down prior to the current economic downturn.
The downgrades include two subordinate tranches from the Ford
Credit Auto Owner Trust 2008-A transaction. Moody's currently
anticipates this transaction to incur lifetime cumulative net
losses between 3.00% and 3.50%. Moody's had originally expected
cumulative net losses to be between 1.25% and 1.75%. The weaker
than expected performance of recent Ford transactions has occurred
amid a challenging economic environment that has put pressure on
prime auto loan performance across the industry in general.
Complete rating actions are:
Issuer: Ford Credit Auto Owner Trust 2006-A
-- Cl. C, Upgraded to Aaa from Aa1, previously on 12/19/2007
Upgraded to Aa1 from A1
Issuer: Ford Credit Auto Owner Trust 2006-2
-- Cl. C, Upgraded to Aaa from Aa3, previously on 12/19/2007
Upgraded to Aa3 from A3
Issuer: Ford Credit Auto Owner Trust 2006-3
-- Cl. B, Upgraded to Aaa from Aa1, previously on 12/19/2007
Upgraded to Aa1 from Aa2
-- Cl. C, Upgraded to A1 from A2, previously on 12/19/2007
Upgraded to A2 from Baa1
Issuer: Ford Credit Auto Owner Trust 2006-B
-- Cl. B, Upgraded to Aa1 from Aa3, previously on 12/19/2007
Upgraded to Aa3 from A1
-- Cl. C, Upgraded to A1 from Baa1, previously on 12/19/2007
Upgraded to Baa1 from Baa2
Issuer: Ford Credit Auto Owner Trust 2006-C
-- Cl. B, Upgraded to Aa1 from Aa3, previously on 12/19/2007
Upgraded to Aa3 from A1
-- Cl. C, Upgraded to A1 from Baa2, previously on 12/5/2006
Assigned Baa2
Issuer: Ford Credit Auto Owner Trust 2008-A
-- Cl. C, Downgraded to A3 from A2, previously on 1/30/2008
Assigned A2
-- Cl. D, Downgraded to Ba1 from Baa2, previously on 1/30/2008
Assigned Baa2
Ford Credit provides wholesale, retail, and lease financing,
primarily to Ford dealers. Ford Motor Company, headquartered in
Dearborn, is one the world's largest auto manufacturers. Ford's
long-term unsecured bonds are rated Caa3 while Ford Credit's long-
term unsecured bonds are rated Caa1. The rating outlook for both
companies is negative
FORD MOTOR: Launches Restructuring Plan; To Cut $10.4BB in Debt
---------------------------------------------------------------
Ford Motor Company (NYSE: F) said its Board of Directors and the
Board of Directors of Ford Motor Credit Company have approved a
plan to restructure Ford's debt through a combination of a
conversion offer by Ford and cash tender offers by Ford Credit.
According to Bloomberg News, Ford Motor is looking to retire as
much as $10.4 billion in debt.
"The debt restructuring plan we are announcing [] is a critical
step in Ford's overall transformation," said Ford President and
CEO Alan Mulally. "We are continuing to work with all of our
stakeholders -- including employees, dealers and suppliers -- to
secure Ford's future in this difficult economic environment."
By using a combination of Ford and Ford Credit cash on hand and
Ford equity to retire certain long-term debt early, Ford would
significantly reduce its debt obligations and annual interest
expense. The amount of the debt and interest expense reductions
will be dependent upon the level of participation by debt holders.
Conversion Offer
As part of this debt restructuring plan, Ford has launched a
conversion offer in which it is offering to pay a premium in cash
to induce the holders of its outstanding 4.25% Senior Convertible
Notes due December 15, 2036, to convert any and all Convertible
Notes into shares of Ford's common stock. The Convertible Notes
were issued in 2006 and the outstanding principal amount of such
Convertible Notes is approximately $4.88 billion. The Convertible
Notes are currently convertible into shares of Ford common stock
at a conversion rate of 108.6957 shares per $1,000 principal
amount of the Convertible Notes.
Holders who elect to convert their Convertible Notes into shares
of Ford common stock pursuant to the Conversion Offer will receive
the 108.6957 shares of Ford common stock plus $80 in cash for each
$1,000 principal amount of the Convertible Notes converted. The
Conversion Offer is being made on additional terms and conditions
which are set forth in an offering circular dated March 4, 2009,
and the related letter of transmittal, both of which are being
sent to holders of the Convertible Notes. Holders are urged to
read the Convertible Notes Offering Circular and Convertible Notes
Letter of Transmittal carefully when they become available.
Copies of the Convertible Notes Offering Circular and the
Convertible Notes Letter of Transmittal may be obtained from the
Information Agent for the Conversion Offer, Georgeson Inc., by
calling toll free at 800-457-0759.
The Conversion Offer will expire at 9:00 a.m., New York City time,
on Friday, April 3, 2009, unless extended or earlier terminated.
Any tendered Convertible Notes may be withdrawn prior to, but not
after, the Expiration Time, and withdrawn Convertible Notes may be
re-tendered by a holder at any time prior to the Expiration Time.
Consummation of the Conversion Offer is subject to, and
conditioned upon, the satisfaction or, where applicable, waiver of
certain conditions set forth in the Convertible Note Offering
Circular. Subject to applicable law, Ford may amend, extend, or
terminate the Conversion Offer at any time.
Ford Credit Cash Tender Offers
Concurrent with the announcement, Ford Credit commenced a
$1.3 billion cash tender offer to purchase certain series of
Ford's outstanding unsecured, nonconvertible debt and has
commenced a separate $500 million cash tender offer to purchase
Ford's senior secured term loan debt.
Neither the Conversion Offer nor either of the Tender Offers is or
will be contingent upon the completion of any other offer.
Trust Preferred Securities
Ford intends to elect to defer future interest payments on its
6.50% Junior Subordinated Convertible Debentures due January 15,
2032, as permitted by the terms of the Debentures, which will
result in the deferral of the quarterly distributions on the 6.50%
Cumulative Convertible Trust Preferred Securities (liquidation
preference $50.00 per preferred security) of Ford Motor Company
Capital Trust II for a corresponding period. The deferral will
commence with the April 15, 2009 payment date. Under the terms of
the Debentures, Ford is permitted to defer payments of interest
for up to 20 consecutive quarters.
Previously Announced Tentative UAW Agreements
The Conversion Offer and Tender Offers follow the previously
announced tentative agreements reached with the United Auto
Workers that, if ratified, will allow Ford to reduce its hourly
labor costs and provide it with the option to use common stock to
pay up to 50 percent of its future cash payment obligations to the
Voluntary Employee Beneficiary Association health care trust.
Ford will provide more details about the agreements following the
ratification process.
With respect to the option to satisfy up to 50 percent of its VEBA
obligations in stock, Ford would consider each payment when it is
due and use its discretion in determining whether paying with cash
or stock makes sense at the time, balancing its liquidity needs
and preserving shareholder value.
Both the operating-related and VEBA-related agreements would be
conditioned on, among other things, Ford pursuing restructuring
actions with other stakeholders, including meaningful debt
reduction over time consistent with requirements applicable to its
domestic competitors under their government-sponsored
restructurings. The VEBA-related tentative agreement, which would
modify the existing Settlement Agreement dated March 28, 2008,
among Ford, the UAW and class representatives of former UAW-
represented Ford employees, relating to retiree health care
obligations, also would be subject to final court approval and
other conditions.
Market's Response
Shares of Ford Motor Co. slid Wednesday evening after the
announcement, Carla Mozee at MarketWatch says. Ms. Mozee relates
that Ford shares tumbled 14% to $1.61 in heavy volume of nearly
2.5 million shares exchanged.
Keith Naughton and Bill Koenig at Bloomberg News, citing CMA
DataVision, reports that traders of credit-default swaps are
demanding a mid-price of 84% upfront, in addition to 5% a year, to
protect against a Ford default for five years -- that is, it would
cost $8.4 million initially and $500,000 annually to protect $10
million of Ford debt for five years. The price is unchanged from
Tuesday.
CMA data, according to Messrs. Naughton and Koenig, show that
contracts protecting against a default by Ford Motor Credit are
trading at about 45% upfront, in addition to 5% a year -- that is,
it would cost $4.5 million and then $500,000 annually to protect
the motor credit unit debt for five years.
"This is an enormously leveraged company, so if you reduce the
debt, you reduce the company's risk profile," said auto analyst
John Casesa of Casesa Shapiro Group in New York, according to
Bloomberg News. "The company faces tremendous operating risk so
reducing the financial risk is welcome."
The debt-swap offer was "a distressed exchange" and "tantamount to
a default" of the debt, Jeff Bennett and Matthew Dolan at The Wall
Street Journal relate, citing Standard & Poor's Ratings Services,
which downgraded its rating of Ford due to the offer.
DBRS, according to WSJ, said that there is "considerable execution
risk with respect to every major component of the proposed debt
restructuring" but if Ford succeeds it would have "significantly
greater financial flexibility."
About Ford Motor Credit Company
Ford Motor Credit Company LLC -- http://www.fordcredit.com-- is
one of the world's largest automotive finance companies and has
supported the sale of Ford Motor Company products since 1959.
Ford Motor Credit is an indirect, wholly owned subsidiary of Ford.
It provides automotive financing for Ford, Lincoln, Mercury and
Volvo dealers and customers.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
Moody's Investors Service in December 2008 lowered the Corporate
Family Rating and Probability of Default Rating of Ford Motor
Company to Caa3 from Caa1 and lowered the company's Speculative
Grade Liquidity rating to SGL-4 from SGL-3. The outlook is
negative. The downgrade reflects the increased risk that Ford
will have to undertake some form of balance sheet restructuring in
order to achieve the same UAW concessions that General Motors and
Chrysler are likely to achieve as a result of the recently-
approved government bailout loans. Such a balance sheet
restructuring would likely entail a loss for bond holders and
would be viewed by Moody's as a distressed exchange and
consequently treated as a default for analytic purposes.
FORD MOTOR CREDIT: Offers to Buy Back Debt Securities, Term Loan
----------------------------------------------------------------
Ford Motor Credit Company said its Board of Directors and the
Board of Directors of Ford Motor Company (NYSE: F) have approved a
plan to restructure Ford's debt through a combination of a
conversion offer by Ford and tender offers by Ford Credit.
As part of this debt restructuring plan, Ford Credit has commenced
a $1.3 billion cash tender offer to purchase Ford's unsecured,
nonconvertible debt securities, of which approximately
$8.9 billion aggregate principal amount is outstanding. Ford
Credit also has commenced a separate $500 million cash tender
offer to purchase Ford's senior secured term loan debt, of which
$6.9 billion aggregate principal amount is outstanding, under
Ford's secured Credit Agreement dated December 15, 2006. No debt
securities of Ford Credit are included in these tender offers.
"The tender offers we are announcing [] will play a key role in
supporting Ford's plan to create a healthy, profitable
enterprise," said Ford Credit Chairman and CEO Mike Bannister. "It
is in Ford Credit's best interest to advance Ford's long-term
financial stability as it will strengthen our ability to
profitably support the sale of Ford products."
Any Notes acquired by Ford Credit will be retired in settlement of
existing intercompany tax liabilities to Ford or in distributions
to Ford. Any Term Loan Debt acquired by Ford Credit is expected
to be distributed to its parent, Ford Holdings LLC, and forgiven.
These payments and distributions by Ford Credit are consistent
with its previously announced plans to return capital to Ford.
Notes Cash Tender Offer
Ford Credit is offering to purchase the Notes on terms and
conditions that are set forth in an offer to purchase dated
March 4, 2009, and the related letter of transmittal, both of
which are being sent to holders of the Notes.
Ford Credit is offering to purchase the Notes for an aggregate
purchase price of up to $1.3 billion. If the aggregate purchase
price for Notes that are validly tendered exceeds the Maximum
Notes Tender Amount, Ford Credit will accept for payment only the
aggregate principal amount of Notes that does not result in an
aggregate purchase price above the Maximum Notes Tender Amount,
and the Notes will be purchased in accordance with the Acceptance
Priority Level.
All Notes tendered having a higher Acceptance Priority Level will
be accepted before any tendered Notes having a lower Acceptance
Priority Level are accepted. If there are sufficient remaining
funds to purchase some, but not all, of the Notes of an applicable
Acceptance Priority Level, the amount of Notes purchased in that
priority level will be prorated based on the aggregate principal
amount tendered with respect to the applicable Acceptance Priority
Level. In that event, Notes of any other series with a lower
Acceptance Priority Level than the prorated series of Notes will
not be accepted for purchase.
Holders of Notes must tender their Notes before 5:00 p.m., New
York City time, on Thursday, March 19, 2009, unless extended (such
date and time, as the same may be extended, the "Notes Early
Tender Time") to be eligible to receive the Notes Total
Consideration. Holders who tender their Notes after the Notes
Early Tender Time will be eligible to receive only the Notes
Tender Offer Consideration.
The Notes Tender Offer will expire at 9:00 a.m., New York City
time, on Friday, April 3, 2009, unless extended or earlier
terminated. Notes tendered pursuant to the offer may not be
withdrawn, unless otherwise required by law.
The complete terms and conditions of the Notes Tender Offer are
set forth in the Notes Offer to Purchase and the Notes Letter of
Transmittal that are being sent to holders of the Notes. Holders
are urged to read the Notes Tender Offer documents carefully when
they become available. Copies of the Notes Offer to Purchase and
Notes Letter of Transmittal may be obtained from the Information
Agent for the Notes Tender Offer, Global Bondholder Services
Corporation, by calling (866) 470-4300.
Consummation of the Notes Tender Offer is subject to, and
conditioned upon the satisfaction or, where applicable, waiver of
certain conditions set forth in the Notes Offer to Purchase. Ford
Credit may amend, extend, or terminate the Notes Tender Offer at
any time.
Cash Tender Offer for Senior Secured Term Loan Debt
Ford Credit also has commenced a $500 million cash tender offer to
purchase Ford's Term Loan Debt. The Term Loan Offer will be
conducted on a "Dutch auction" basis whereby term loan lenders
will be invited to submit bids to sell their Term Loan Debt within
a price range of not less than 38% of par, nor greater than 47% of
par. Term loan lenders will receive the lowest price within the
range at which Ford Credit can complete the Term Loan Offer for
$500 million. If the aggregate purchase price for Term Loan Debt
tendered exceeds $500 million, Ford Credit will (i) purchase at
the Clearing Price all Term Loan Debt tendered at a price below
the Clearing Price and (ii) purchase Term Loan Debt tendered at
the Clearing Price on a pro-rated basis.
Consummation of the Term Loan Offer is subject to, and conditioned
upon the satisfaction or, where applicable, waiver of certain
conditions set forth in the offer to purchase.
If the amount of Notes and Term Loan Debt tendered results in a
payment by Ford Credit of less than $1.8 billion aggregate
consideration, Ford Credit may apply such remaining cash to the
repurchase of other debt of Ford through tender offers, exchange
offers, privately negotiated transactions, open market purchases
or otherwise, or may distribute such cash to Ford for such
purpose, subject to any applicable restrictions.
Goldman, Sachs & Co., Blackstone Advisory Services L.P., Citigroup
Global Markets Inc., Deutsche Bank Securities Inc. and J. P.
Morgan Securities Inc., are serving as Dealer Managers in
connection with the Notes Tender Offer. Global Bondholder
Services Corporation is serving as Depositary Agent and
Information Agent in connection with the Notes Tender Offer.
Blackstone, Citigroup Global Markets Inc., Goldman Sachs Credit
Partners L.P., and J. P. Morgan Securities Inc. are serving as
Auction Agents in connection with the Term Loan Offer.
About Ford Motor Credit Company
Ford Motor Credit Company LLC -- http://www.fordcredit.com-- is
one of the world's largest automotive finance companies and has
supported the sale of Ford Motor Company products since 1959. Ford
Motor Credit is an indirect, wholly owned subsidiary of Ford. It
provides automotive financing for Ford, Lincoln, Mercury and Volvo
dealers and customers.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
Moody's Investors Service in December 2008 lowered the Corporate
Family Rating and Probability of Default Rating of Ford Motor
Company to Caa3 from Caa1 and lowered the company's Speculative
Grade Liquidity rating to SGL-4 from SGL-3. The outlook is
negative. The downgrade reflects the increased risk that Ford
will have to undertake some form of balance sheet restructuring in
order to achieve the same UAW concessions that General Motors and
Chrysler are likely to achieve as a result of the recently-
approved government bailout loans. Such a balance sheet
restructuring would likely entail a loss for bond holders and
would be viewed by Moody's as a distressed exchange and
consequently treated as a default for analytic purposes.
FULLMER CATTLE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Que Jay Fullmer
dba Fullmer Cattle Company
Debora Jean Fullmer
1460 FM 1760
Muleshoe, TX 79347
Bankruptcy Case No.: 09-50086
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Fullmer Auto Company Texas, LLC 09-50087
Fullmer Cattle Company Idaho, LLC 09-50088
Fullmer Cattle Company Texas, LLC 09-50089
Fullmer Cattle Operating Company, LLC 09-50090
Fullmer Equipment Holding Company, LLC 09-50091
Fullmer Feeders Company, LLC 09-50092
Fullmer Trucking Company, LLC 09-50093
Nicks Dairy Commodities, LLC 09-50094
Fullmer Cattle Company New Mexico, LLC 09-50095
Fullmer Cattle Company Northern California, LLC 09-50096
Fullmer Cattle Company, LLC 09-50097
Fort Worth Diagnostic Clinic, P.A. 09-41361
Type of Business: The Debtors sell livestock and farm products.
Chapter 11 Petition Date: March 2, 2009
Court: Northern District of Texas (Lubbock)
Judge: Robert L. Jones
Debtor's Counsel: David R. Langston, Esq.
drl@mhba.com
Mullin, Hoard & Brown
P.O. Box 2585
Lubbock, TX 79408-2585
Tel: (806) 765-7491
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
The Debtors did not file a list of 20 largest unsecured creditors.
GE CAPITAL: Credit Default Swaps Increase 4x Since May 2008
-----------------------------------------------------------
The cost of protecting against a default by General Electric
Capital Corp. has increased substantially.
Various reports say sellers of credit insurance on General
Electric Co's (GE.N) finance arm were asking to be paid on an
upfront basis on Monday. The reports note this is a sign of
greater perceived risk after Moody's Investors Service threatened
to cut GE Capital's "triple-A" rating.
Reuters relates that five-year credit default swaps on GE Capital
were quoted around 8.5% upfront, meaning it would cost $850,000 in
an upfront payment, plus $500,000 in annual payments to insure $10
million of GE Capital debt, according to data from Phoenix
Partners Group. On Friday, it cost $710,000 a year to insure
$10 million of debt, Reuters notes.
According to MarketWatch's Alistair Barr, Phoenix Partners Group
said the cost of insuring against a GE Capital default jumped to
distressed levels. Phoenix Partners said credit-default swaps on
GE Capital traded 11% upfront on Monday.
In May 2008, the cost of insuring against a GE Capital default was
roughly $100,000, according to The Bloomberg.
Mr. Barr explains that when contracts on CDS trade upfront, it
means investors seeking protection against a default must pay fees
immediately. These contracts, Mr. Barr says, usually require only
annual payments, but when concerns reach extreme levels, sellers
of protection demand money upfront as well.
Last week, Moody's said its review for possible downgrade of the
long-term ratings of General Electric Company (Aaa senior
unsecured) and General Electric Capital Corporation (GECC; Aaa
senior unsecured) continues subsequent to GE's announcement that
it will reduce its annual dividend by 68% from an quarterly rate
of $0.31 per share to $0.10 per share. The annualized effect of
this action will reduce the aggregated dividend by about $9
billion to about $4.5 billion.
Moody's analyst Richard Lane said that "the reduction in GE's
common dividend will address some of the concerns regarding the
stress on GE's cash flow. Nonetheless, Moody's is continuing its
review of the ratings for possible downgrade."
Moody's review remains centered on GECC's performance prospects
given the deteriorating trends in asset quality, the headwinds
facing the industrial segment's cash flow as a result of the
global economic downturn and continued tight credit market
conditions.
On January 27, 2009, Moody's placed the Aaa long-term of GE and
GECC, under review for possible downgrade. The review has no
impact on the FDIC-guaranteed debt issued by GECC, which remains
at Aaa with a stable outlook.
GE Commercial Finance, headquartered in Norwalk, Conn., offers
business customers an array of financial products and services.
With lending products, growth capital, revolving lines of credit,
equipment leasing of every kind, cash flow programs, asset
financing, and more, GE Commercial Finance plays a key role for
client businesses in over 35 countries. The industries served
include healthcare, manufacturing, fleet management,
communications, construction, energy, aviation, infrastructure and
equipment, as well as many others.
GE Commercial Finance is part of GE Capital -- General Electric's
financing unit -- which serves consumers, retailers and businesses
around the globe. GE Capital finished 2007 with net income of
$10.3 billion and total assets in excess of
$646 billion.
GRAFTECH INTERNATIONAL: Moody's Downgrades Liquidity Rating
-----------------------------------------------------------
Moody's Investors Service lowered GrafTech International Ltd.'s
Speculative Grade Liquidity Rating to SGL-3 (adequate liquidity)
from SGL-1 (excellent liquidity). The change in the liquidity
rating reflects the low visibility into 2009 demand for GrafTech's
graphite electrodes sold for use in electric arc furnaces, the
unusually steep downturn in steel demand and an expected decline
in GrafTech's free cash flow. The Ba2 Corporate Family Rating and
the Ba3 rating on the 10.25% notes due 2012 were affirmed. The
rating on the revolving credit facility was downgraded to Ba1 and
the loss-given-default assessment changed in accordance with the
application of Moody's LGD methodology due to changes in
GrafTech's capital structure. The ratings outlook remains stable.
These summarizes the ratings activity.
Ratings downgraded for GrafTech International Ltd.:
* Speculative grade liquidity rating - SGL-3 from SGL-1
Ratings affirmed for GrafTech International Ltd.:
* Corporate family rating -- Ba2
* Probability of default rating -- Ba2
Ratings change for GrafTech's special purpose financing vehicle,
GrafTech Finance, Inc.:
* Gtd sr sec revolving credit facility due 2010 -- Ba1 (LGD3,
36%) from Baa3 (LGD2, 21%)
Rating affirmed for GrafTech's special purpose financing vehicle,
GrafTech Finance, Inc.:
* 10.25% Gtd sr unsec global notes due 2012 -- Ba3 (LGD5, 84%)
from Ba3 (LGD5, 73%)
The change in GrafTech's liquidity rating reflects Moody's
expectation the company will generate lower free cash flow in 2009
than in each of the past three years and potentially negative free
cash flow in certain quarters. The global economic slowdown has
resulted in a drop off in demand for steel and GrafTech's graphite
electrodes used in electric arc furnaces. Historically, GrafTech
has sold its graphite electrodes through one year contracts and
would have established a full book of business early in the
calendar year. The company has indicated that is not the case
this year and it has little visibility regarding 2009 sales
volumes, but expects declines in demand as customers de-stock
existing inventory and attempt to assess future demand for their
steel products. GrafTech may have stronger liquidity than the
typical SGL-3 rated issuer and the speculative grade liquidity
rating could be changed after there is better visibility into the
future demand for graphite electrodes. Additionally, purchase
prices for GrafTech's needle coke raw material will be higher in
2009, which could further pressure margins and cash flows.
The company will rely on its $215 million revolving credit
facility due 2010, accounts receivable factoring program and
supply chain financing agreement for liquidity. As of
December 31, 2008, there was $168 million of available borrowing
capacity under the revolver. The facility does have financial
covenants (including a Sr. Secured Leveraged Ratio and a Coverage
Ratio) that can limit availability if earnings decline
significantly.
Moody's most recent announcement concerning the ratings for
GrafTech was on June 3, 2008, when GrafTech's CFR was upgraded to
Ba2 as a result of improved profitability and free cash flow, as
well as debt reduction, and the outlook moved to stable.
GrafTech International Ltd., headquartered in Parma, Ohio, is a
leading global manufacturer of graphite electrodes, and other
graphite products. Revenues were $1.2 billion for the LTM ended
December 31, 2008.
GREGORY FOREST: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Gregory Forest Products, LLC
P.O. Box 379
Brookville, PA 15825
Tel: (814) 849-6604
Bankruptcy Case No.: 09-10338
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
Western District of Pennsylvania (Erie)
Company Description: The Debtor sells lumber and other building
materials.
Debtor's Counsel: Donald R. Calaiaro
Calaiaro & Corbett, P.C.
Grant Building, Suite 1105
310 Grant Street
Pittsburgh, PA 15219-2230
Tel: (412) 232-0930
Fax: (412) 232-3858
Email: dcalaiaro@calaiarocorbett.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Paul Gregory, president of the company.
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
GTS PROPERTY: Case Summary & Largest Unsecured Creditor
-------------------------------------------------------
Debtor: GTS Property Portfolios B-3, LLC
3250 Wilshire Blvd., Suite 1106
Los Angeles, CA 90010-1577
Bankruptcy Case No.: 09-14774
Chapter 11 Petition Date: March 3,2009
Court: Central District Of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: Bernard D Bollinger, Jr.
bbollinger@buchalter.com
Buchalter Nemer
1000 Wilshire Blvd., Suite 1500
Los Angeles, CA 90017
Tel: (213) 891-5009
Fax: (213) 630-5736
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
General Electric Capital unstated
Corporation
c/o GE Real Estate
1901 Main Street, 7th Floor
Irvine, California 92614
Fax: (949) 477-0904
email:
The petition was signed by Sandy Haryono, chief operating officer.
HIGH COUNTRY DEVELOPMENTS: Voluntary Chapter 11 Case Summary
------------------------------------------------------------
Debtor: High Country Developments, LLC
7332 W 94th Ave.
Westminster, CO 80021-5610
Bankruptcy Case No.: 09-12881
Chapter 11 Petition Date: February 26, 2009
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Michael E. Romero
Debtor's Counsel: William G. Horlbeck
216 16th St., Ste. 1210
Denver, CO 80202
Tel: (303) 592-1650
Fax: (303) 592-1701
Email: wghorlbeckpc@msn.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by James S. Menees, III, manager of the
company.
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
ICP D200: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: ICP D200, LLC
6900 E. Camelback Road, Suite 300
Scottsdale, Arizona 85251
Bankruptcy Case No.: 09-03499
Chapter 11 Petition Date: February 27, 2009
Court: District of Arizona (Phoenix)
Judge: George B. Nielsen Jr.
Debtor's Counsel: Shelton L. Freeman, Esq.
tfreeman@dmylphx.com
DeConcini McDonald Yetwin & Lacy PC
7310 North 16th Street #330
Phoenix, AZ 85020
Tel: (602) 282-0500
Fax: (602) 282-0520
Estimated Assets: $10 million $50 million
Estimated Debts: $10 million $50 million
The Debtor did not file a list of 20 largest unsecured creditors.
The petition was signed by Thomas Donahue, managing member.
INNOVATIVE COMM: Virgin Islands Property Sold for $800,000
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of the Virgin Islands
has approved the sale of Emerging Communications, Inc.'s
residential real property located at 143 Anna's Hope, St. Croix,
U.S. Virgin Islands, for $800,000. Stan Springel, the Chapter 11
trustee, is authorized to sell the property, including all
furnishings to, Alexandros and Dilma Koutsakis.
The property will be sold free and clear of all liens, claims,
encumbrances and others interests. Any interests will be attached
to the proceeds of the sale.
In his motion, the Chapter 11 trustee said that the property is
not necessary to the administration of the estate.
The trustee is authorized to pay all prorated taxes owing on the
property and other closing costs as set forth in the Agreements.
All remaining net proceeds will be held in a segregated account
pending determination of all relevant claims or the agreement of
the parties and further order of the Court.
As reported in the Troubled Company Reporter on Feb. 4, 2009, the
Associated Press reported that National Rural Utilities
Cooperative Finance Corp. was set to acquire Innovative Telephone
Company and other assets of Innovative Communication Corp., or
ICC, to satisfy part of a bankruptcy judgment against Innovative
Communication.
Based in Christiansted, St. Croix, U.S. Virgin Islands,
Innovative Communication Corporation is a telecommunications and
media company with extensive holdings throughout the Caribbean
basin. The company's operations are in Belize, British Virgin
Islands, Guadeloupe, Martinique, Saint-Martin, Sint Maarten,
U.S. Virgin Islands and France and include local, long distance
and cellular telephone companies, Internet access providers,
cable television companies, business systems, and The Virgin
Islands Daily News, a Pulitzer Prize-winning newspaper.
On Feb. 10, 2006, creditors Greenlight Capital Qualified, L.P.,
Greenlight Capital, L.P., and Greenlight Capital Offshore, Ltd.,
filed involuntary chapter 11 petition against Innovative
Communication Company LLC and Emerging Communications, Inc., and
Jeffrey J. Prosser, the company's principal (Bankr. D. Del. Case
Nos. 06-10133 through 06-10135). The Greenlight creditors
disclosed US$18,780,614 in total claims.
On July 31, 2006, Innovative LLC, Emerging, and Mr. Prosser,
filed voluntary chapter 11 petitions (Bankr. D. V.I. Case Nos.
06-30007 through 06-30009). Pursuant to Rule 1003-1 of the
Local Bankruptcy Rules of the District Court of the Virgin
Islands, Bankruptcy Division, Mr. Prosser, and Bobby Lubana,
were designated as the individuals who are the principal
operating officers of the alleged debtor. On Dec. 14, 2006, the
Delaware Bankruptcy Court entered an order transferring the
venue of the involuntary bankruptcy cases transferring to the
U.S. District Court for the District of the Virgin Islands,
Bankruptcy Division.
On July 5, 2007, the Greenlight creditors filed an involuntary
chapter 11 petition against Innovative Communication Corporation
(Bankr. D. V.I. Case No. 07-30012). The creditors disclosed
total aggregate claims of US$56,341,843. Matthew J. Duensing,
Esq., and Richard H. Dollison, Esq., at Stryker, Duensing,
Casner & Dollison, and Matthew P. Ward, Esq., at Skadden Arps
Slate Meagher & Flom LLP, represent the creditors.
Stan Springel of Alvarez & Marsal, the Court-appointed chapter
11 trustee, is represented by Andrew Kamensky, Esq., at Hunton &
Williams.
INTEGRA BANK: Moody's Confirms D+ Bank Financial Strength Rating
----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Integra Bank
N.A. Integra is rated D+ for bank financial strength and Ba1/Not-
Prime for deposits. The holding company, Integra Bank
Corporation, is unrated. The outlook on Integra is negative.
This rating action concludes the review for possible downgrade
that began in February 2009.
The confirmation of Integra's ratings reflects the increase in the
bank's capital base from the sale of $84 million of preferred
stock and related common stock warrants to the U.S. Treasury under
the Capital Purchase Program. In Moody's opinion, Integra's
improved capital position will help absorb expected near-term
deterioration in asset quality, stemming largely from Integra's
commercial real estate portfolio, construction and land
development in particular. Nonetheless, the negative outlook
reflects the challenges associated with Integra's sizeable
commercial real estate concentration in the current economic
environment.
Moody's last rating action on Integra was on February 17, 2009,
when it downgraded the bank's financial strength rating to D+ from
C, and its deposit ratings to Ba1/Not-Prime from A3/Prime-2.
Following that rating action, Integra's long-term ratings remained
under review for possible downgrade.
Integra Bank Corporation is headquartered in Evansville, Indiana
and reported assets of $3.4 billion at December 31, 2008.
Outlook Actions:
Issuer: Integra Bank National Association
-- Outlook, Changed To Negative From Rating Under Review
Confirmations:
Issuer: Integra Bank National Association
-- Bank Financial Strength Rating, Confirmed at D+
-- Issuer Rating, Confirmed at Ba2
-- OSO Senior Unsecured OSO Rating, Confirmed at Ba2
-- Senior Unsecured Deposit Rating, Confirmed at Ba1
ISTAR FINANCIAL: Fitch Downgrades Issuer Default Rating to 'B-'
---------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating and
outstanding ratings of iStar Financial Inc.:
-- IDR to 'B-' from 'BB';
-- Unsecured revolving credit facilities to 'B-/RR4' from
'BB';
-- Senior unsecured notes to 'B-/RR4' from 'BB';
-- Convertible senior floating-rate notes to 'B-/RR4' from
'BB';
-- Preferred stock to 'CC/RR6' from 'B'.
The ratings have been placed on Rating Watch Negative. The rating
action affects approximately $11 billion of obligations.
Fitch's rating action is driven by continued weakening of SFI's
loan portfolio, pressures on SFI's liquidity and the implications
of SFI potentially entering into a new secured term loan facility
in the near future.
The quality of SFI's loan portfolio continues to deteriorate. For
the quarter ended Dec. 31, 2008, SFI recognized approximately $250
million of loan loss provisions and $110 million of corporate loan
investment impairments. For full year 2008, SFI recognized over
$1 billion of loan loss provisions and nearly $300 million in
asset impairments. As of Dec. 31, 2008, non-accrual loans
represented over 27% of SFI's loan portfolio, up from 9% as of
Dec. 31, 2007. Given the challenging environment for the
commercial real estate debt capital markets, Fitch expects an
increase in both provisions for loan losses and non-accrual loans
in 2009.
Continued reduced capital availability in the commercial real
estate debt capital markets has decreased the ability of SFI's
borrowers to repay loans, as many borrowers historically have
refinanced their loans via the secured debt markets or have sold
assets. The decreased ability of SFI's borrowers to repay loans
reduces the company's ability to meet its own future funding
obligations and debt maturities from internally generated cash
sources. This reduction in cash sources could result in SFI
having a liquidity shortfall in 2009 in the absence of accessing
external capital, given the magnitude of SFI's future funding
obligations and debt maturities over the next 12 months. While
the company has taken a more proactive stance towards resolving
non-accrual loans, Fitch believes that loan resolutions and asset
sales will be a prolonged process in the current environment.
The entry into the currently contemplated $700 million to
$1 billion secured term loan facility with certain of SFI's
unsecured revolving credit facility lenders would provide capital
to improve the company's liquidity; however, the unencumbered
asset pool currently supporting unsecured creditors will decline
in size and would likely diminish in quality. Proforma for the
new secured facility, and assuming that no non-accrual loans are
placed into the collateral pool, Fitch calculates that non-
performing loans would represent between 29% and 37% of total
unencumbered assets, up from 23% as of Dec. 31, 2008, and the sum
of non-performing loans and watch list loans would represent
between 39% and 49% of total unencumbered assets, up from 31% as
of Dec. 31, 2008.
In accordance with Fitch's Recovery Rating methodology, Fitch has
established RRs because of the IDR downgrade to 'B-'. While
concepts of Fitch's RR methodology are considered for all
companies, explicit recovery ratings are assigned only to those
companies with an IDR of 'B+' or below. At the lower IDR levels,
Fitch believes there is greater probability of default so the
impact of potential recovery prospects on issue-specific ratings
becomes more meaningful and is more explicitly reflected in the
ratings dispersion relative to the IDR.
As a result, Fitch has taken these rating actions:
-- Fitch downgraded the unsecured revolving credit facilities,
senior unsecured notes and convertible senior floating-rate
notes to B- from 'BB', reflecting no notching differential
from SFI's 'B-' IDR, as Fitch estimates recovery in the 30%-
50% range in the event of default.
-- Fitch downgraded SFI's preferred stock to 'CC' from 'B',
reflecting a two-notch negative differential from SFI's 'B-'
IDR, as Fitch estimates little to no recovery in the event
of default.
Resolution of the Rating Watch Negative will be driven by SFI's
ability to consummate entry into the new secured facility. If the
company enters into the new secured credit facility, Fitch expects
to remove the Rating Watch, affirm the IDR at 'B-' and assign a
Negative Outlook. If the company does not enter into the new
secured facility, Fitch anticipates downgrading the IDR to 'CC'
from 'B-' to reflect a substantially more challenged liquidity
position and assigning a Negative Outlook.
Headquartered in New York City, SFI provides structured financing
and corporate leasing of commercial real estate nationwide. SFI
leverages its expertise in real estate, capital markets, and
corporate finance to serve real estate investors and corporations
with sophisticated financing requirements. As of Dec. 31, 2008,
SFI had $15.8 billion of undepreciated assets and $2.9 billion of
undepreciated book equity.
JEVIC TRANSPORTATION: Creditors May Sue Owner Sun Capital
---------------------------------------------------------
Jevic Transportation Inc. is no longer in immediate danger of
having the case converted to a liquidation in Chapter 7, although
the owner is at risk of being sued by creditors, Bloomberg's Bill
Rochelle said.
The U.S. Bankruptcy Court for the District of Delaware authorized
the official creditors' committee to sue Sun Capital Partners,
which acquired Jevic in 2006.
CIT Group/Business Credit Inc., which according to Bloomberg, is
still owed $488,000, filed a motion in January to dismiss the
Chapter 11 case or convert it to Chapter 7. The CIT Group in its
motion told the Court that because the Debtors have no ongoing
business operations and have liquidated their assets, there is no
good reason to keep these cases in Chapter 11. A court filing
indicates the motion is being withdrawn, Mr. Rochelle said.
CIT Group/Business Credit led a syndicate of banks that had
arranged a $60,000,000 a revolving credit facility used by Jevic
to fund its Chapter 11 cases.
About Jevic Transportation
Based in Delanco, New Jersey, Jevic Transportation Inc. --
http://www.jevic.com/-- provides trucking services. The company
has two units: Jevic Holding Corp. and Creek Road Properties.
Neither of the units have assets nor operations. The company and
its affiliates filed for chapter 11 protection on May 20, 2008
(Bankr. D. Del. Case No. 08-11008). Domenic E. Pacitti, Esq., and
Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg &
Ellers, in Wilmington, Delaware, represent Jevic Transportation.
The U.S. Trustee for Region 3 has appointed five creditors to
serve on an Official Committee of Unsecured Creditors. Robert J.
Feinstein, Esq., Bruce Grohsgal, Esq., and Maria A. Bove, Esq., at
Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware,
represent the Official Committee of Unsecured Creditors.
Before filing for bankruptcy, the Debtors initiated an orderly
wind-down process. As a part of the wind-down process, the
Debtors have ceased substantially all of their business and
terminated approximately 90% of their employees. The Debtors
continue to manage the wind-down process in attempt to deliver all
of the freight that is in their system and to retrieve their
assets.
When the Debtors filed for protection against their creditors,
they listed assets and debts between $50 million and
$100 million.
As reported in the Troubled Company Reporter on Jan. 3, 2009,
The company reported a net loss of $296,469 on $0 revenues for the
month of September 2008.
At Sept. 30, 2008, the company had total assets of $28,934,350,
total liabilities of $36,188,467, and stockholders' deficit of
$7,254,117.
LAUREATE EDUCATION: S&P Affirms Corporate Credit Rating at 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'B'
corporate credit rating on Laureate Education Inc. and removed the
ratings from CreditWatch with negative implications, where they
had been placed on Dec. 5, 2008. The outlook is negative.
S&P also affirmed its issue-level rating on Laureate's secured
debt at 'B'. S&P revised the recovery rating on this debt to '4'
from '3'. The '4' recovery rating indicates S&P's expectation of
average (30%-50%) recovery for lenders in the event of a payment
default.
At the same time, S&P lowered the issue-level ratings on the
company's $260 million 10% senior unsecured notes and 10.25%
senior toggle notes due 2015 to 'CCC+' from 'B-'. S&P revised the
recovery rating on the notes to '6' from '5'. The '6' recovery
rating indicates S&P's expectation of negligible (0%-10%) recovery
in the event of a payment default.
In addition, S&P affirmed the issue-level rating on Laureate's
$310 million 11.75% senior subordinated notes due 2017 at 'CCC+'
and left the recovery rating on this debt unchanged at '6'. The
'6' recovery rating indicates S&P's expectation of negligible (0%-
10%) recovery in the event of a payment default.
The affirmation of the corporate credit ratings is based on
Standard & Poor's expectation that the company's profitability and
liquidity will be adequate over the near to intermediate term.
"Laureate's rating reflects high debt leverage and weak cash flow
protection," said Standard & Poor's credit analyst Hal F. Diamond,
"and also considers the challenges inherent in undertaking rapid
expansion and its debt-financed expansion plans." These risks are
only partially offset by the company's position in the highly
fragmented and competitive international postsecondary education
market.
LCM VII: Fitch Downgrades Ratings on Seven Classes of Notes
-----------------------------------------------------------
Fitch Ratings has downgraded, assigned a Distressed Recovery
rating, and withdrawn the ratings on all seven classes of notes
issued by LCM VII Ltd. These rating actions are effective
immediately:
-- $126,000,000 class A-1 revolving notes 'CCC' are paid in
full;
-- $250,000,000 class A-2 term notes to 'C/DR2' from 'CCC';
-- $20,000,000 class B notes to 'C/DR6' from 'CCC';
-- $42,763,000 class C notes to 'C/DR6' from 'CCC';
-- $29,040,000 class D notes to 'C/DR6' from 'CCC';
-- $937,000 class E-1 notes to 'C/DR6' from 'CC';
-- $937,000 class E-2 notes to 'C/DR6' from 'CC'.
All classes are withdrawn.
LCM VII was a cash flow collateralized loan obligation with a
market value termination trigger. The liquidation trigger
breached in October 2008 and was uncured, resulting in an event of
default and subsequent liquidation of the portfolio. Fitch has
applied DR ratings based upon the most recent notice of
distribution received from the trustee. The timing and amount of
future distributions, if any, are uncertain. Any significant
payments would affect ultimate recovery on the notes and their DR
ratings.
LEHMAN BROTHERS: PwC to Ask London Court to Rule on Trust Assets
----------------------------------------------------------------
The administrator of Lehman Brothers Holdings Inc.'s European
unit, PricewaterhouseCoopers LLP, said it plans to seek a court-
approved agreement between the investment bank and some of its
creditors.
According to James Lumley of Bloomberg, the administrators asked a
judge at the Royal Courts of Justice in London for a hearing to
propose a so-called scheme of arrangement. The court will be
asked to rule on how "trust property" should be returned to
creditors. Darren Fox, a partner at London law firm Simmons &
Simmons, defined trust property as assets such as "cash or
securities that Lehman clients have a proprietary interest in" and
that didn't belong to Lehman Brothers International (Europe) when
it went into administration.
The hearing is scheduled for March 16 and Lehman creditors are
invited to attend.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers led in the global financial
markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offered a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr.
S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and US$613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600). Several other affiliates followed
thereafter.
Lehman Brothers Finance AG, also known as Lehman Brothers Finance
SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code
in the U.S. Bankruptcy Court in Manhattan on February 10, 2009.
Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc.,
listed estimated assets of more than US$1 billion and estimated
liabilities of more than US$1 billion.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units of Lehman Brothers Holdings, Inc., which has filed for
bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of
JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc.
reported about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
M TANGREDI: Will Liquidate Nashville Restaurants to Pay Debts
-------------------------------------------------------------
Wendy Lee at The Tennessean reports that M. Tangredi's Restaurants
Inc. will liquidate its remaining restaurants in Nashville to its
debts.
Court documents say that M. Tangredi listed three locations in
Nashville:
-- Michael T's on Division Street,
-- Tangredi's Italian Kitchen on Elliston Place, and
-- T's Tuscan Bar and Grill on Belcourt Avenue.
The Tennessean relates that T's Tuscan Bar and Grill has already
closed.
M. Tangredi's Restaurants Inc. offers Italian dining in Nashville,
Tennessee. The Company filed for Chapter 11 bankruptcy protection
on February 5, 2009 (Bankr. M.D. Tenn. Case No. 09-01211). M.
Tangredi's listed $63,600 in assets and $77,000 in assets.
MANITOWOC CO: S&P Changes Outlook to Negative; Keeps 'BB' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
The Manitowoc Co. Inc. to negative from stable. All ratings are
affirmed, including the 'BB' long-term corporate credit rating.
"This action reflects increased concern that Manitowoc's near-term
debt reduction plans may be affected by lower-than-expected
proceeds from an asset divestiture required by regulators to
complete the acquisition of Enodis in late 2008," said Standard &
Poor's credit analyst John R. Sico. In addition, weaker-than-
expected crane segment earnings may further reduce cash flow
available for debt reduction. Based on these prospects, S&P is
concerned that the company, which stated that it could violate
certain debt covenants during the second half of 2009, may not
meet covenants on its credit facilities that step down from 4.0x
currently to 3.75x by Dec. 31, 2009.
The ratings reflect Manitowoc's diversified and leading global
positions in both the cyclical construction and industrial end
markets and the more-stable food service market. This profile is
augmented by the 2008 acquisition of Enodis, which S&P expects
will modestly enhance the company's business risk profile. Still,
Standard & Poor's Ratings Services' ratings take into account the
company's aggressive financial risk profile stemming from an
expansive, albeit strategic acquisition policy.
The Manitowoc, Wisconsin-based company manufactures products for
two distinct segments-cranes and food service equipment-in which
it holds broad, market-leading positions. The company also
maintains good customer, product, and geographic diversity, and
oversees low-cost and efficient global manufacturing operations.
The company had demonstrated good operating performance, with a
sustained improvement in credit measures. Global crane markets,
which had been strong because of worldwide infrastructure needs,
have now changed quite rapidly. Although these markets and
operations are highly cyclical, the abrupt change in the cycle due
in part to a lack of credit availability has been significant.
While S&P's view on the crane industry and the company's
performance always anticipated a cyclical downturn, S&P now
believes that markets are considerably weaker than S&P had
envisioned.
S&P could lower the ratings in the near term if it becomes
apparent that the company may miss its leverage covenant and fails
to obtain relief from its bank lenders. In addition, S&P is
concerned that weakening conditions in the crane market could
create greater financial risk and delay the company's ability to
delever. S&P considers the cyclicality in the crane business to
be a risk and have incorporated this in S&P's sales and operating
margin forecast for crane operations. Any further deceleration
from S&P's current expectations could result in a downgrade even
if the company is able to meet financial covenants or obtain any
necessary waivers or amendments if it such an event occurs. For
example, S&P could lower ratings if weakening demand, especially
within the crane business, results in total debt to EBITDA
exceeding S&P's expectations of 3.5x for a sustained period.
MEMBER BENEFITS: Files for Bankruptcy, Will Shut Down
-----------------------------------------------------
Pacific Business News reports that the Hawaii State Teachers
Association said that its Member Benefits Corp., a separate legal
entity, has filed for bankruptcy and will be closing down.
According to Pacific Business, HSTA said that the decision to file
for bankruptcy was made after an outside team conducted a review
and found that Member Benefits' liabilities exceeded its assets
due to mismanagement. The report says that the problems included
off-balance sheet funds that hadn't been recorded in Member
Benefits' financials or reported to HSTA, resulting in significant
tax liabilities.
Pacific Business, citing HSTA, reports that Member Benefits' two
executive management team members have been dismissed for the
mismanagement.
Citing HSTA, Pacific Business relates that Member Benefits'
bankruptcy won't affect HSTA or its members' benefits.
Pacific Business states that Member Benefits laid off a dozen
workers. According to the report, the Associated Third Party
Administrators, a new third-party administrator in California
which is handling administration work for the VEBA trust of the
school districts in the Washington, has rehired the staff.
Member Benefits Corp. is a nonprofit subsidiary of the Hawaii
State Teachers Association. The Company served as an intermediary
on member insurance and endorsed insurance products, facilitated
enrollment, and negotiated discounts for members on products and
services.
METHODIST HOSPITALS: Moody's Keeps 'Ba3' Rating on $72.6MM Debt
---------------------------------------------------------------
Moody's Investors Service has affirmed Methodist Hospitals' Ba3
bond rating. The affirmation affects approximately $72.6 million
of rated debt outstanding issued through the Indiana Health
Facility Financing Authority. The outlook remains negative.
Legal Security: The series 2001 and Series 1996 bonds are secured
by the gross revenue of the Obligated Group (Methodist Hospitals).
Debt service fund maintained. Rate covenant of 1.10 times.
Interest Rate Derivatives: None
Challenges
* While results improved somewhat in the month of December 2008,
operating performance in unaudited fiscal year 2008 was poor
compared to FY 2007 performance with operating margin of -7.9%
compared to an operating margin of -1.6% in FY 2007 driven by
continued declines in both inpatient admissions and surgeries,
significant 46% increase in bad debt and charity care due in
part to the termination of the Healthcare for the Indigent
program, and increase in supply cost; Moody's note that a
decline in accrued disproportionate share payments in FY 2008
compared to FY 2007 also contributed to the weaker financial
performance
* Volume trends continue to decline reflecting competition, flat
population growth, economic challenges in the service area, and
loss of physicians
* Challenging demographics with high Medicaid and uninsured
population (Medicaid represents approximately 20% of gross
revenue)
* Competition from a number of hospitals, some of which are part
of larger, financially strong systems and a physician owned
hospital and long term acute care hospital located one mile
away from the Merrillville campus
* Unrestricted cash has declined to $110 million (137 days cash
on hand) as of December 31, 2008 from $131.0 million (160 days
cash on hand) as of September 30, 2008 due to operating
performance and investment losses; the organization's
unrestricted assets currently are 45% invested in equities and
could suffer further losses; given current operating challenges,
liquidity could decline more rapidly than previously expected
* Possibility of Methodist having to return the $80 million DSH
received from the State if any issues arise with CMS even
though take backs have never occurred
* Underfunded defined benefit pension plan (pension funded ratio
of 72.4% at FYE 2008)
Strengths
* New permanent CEO and CFO began to implement various expense
reduction measures in November 2008, which has led to some
improvement in operating performance for the month of December
* Leading primary service area market share
* Merrillville campus located in service area with good
demographics and more favorable payer mix
Recent Developments/Results
In FY 2008, a turnaround consultant completed its engagement with
Methodist and a permanent CEO and CFO have been put in place.
Despite the promising results demonstrated in FY 2007 after the
turnaround consultant implemented several initiatives including a
sizeable staff reduction via a voluntary retirement program,
recruitment of physicians of various specialties, and various
revenue cycle initiatives, the new permanent management team faces
significant challenges as they attempt to turn operations.
Inpatient admissions and surgical volumes have continued to erode
in FY 2008 with 19,268 inpatient admissions and 7,831 surgeries
compared to 19,897 inpatient admissions and 8,446 surgeries in FY
2007. Despite the recruitment of over 29 physicians in FY 2007
and attempts to improve physician relations, volumes have
continued to slide at a precipitous pace. The new management team
has been meeting with the medical staff 3-4 times per week in an
attempt to get physician buy-in. Management believes that with a
permanent management team in place, more progress can be made to
build better relations with the medical staff and help restore
volumes. Concurrently, management is continuing to recruit
additional physicians to the medical staff in an effort to address
the current competitive environment that includes other acute care
facilities and physician owned facilities. In recent months,
management recruited a primary care physician and obstetrician and
some former Methodist physicians have expressed an interest in
bringing their practices back to Methodist. In addition to volume
issues, DSH revenues are at risk of a significant decrease in FY
2009 as the current program is being evaluated. At this point in
time, the severity of potential decrease is not known but
management has booked a 40% decline. Management believes that any
change to the DSH program will not result in the full 40% decline
that they are booking, but given the significance of the assumed
decline in DSH revenues, other revenue streams or expense
reductions are necessary to offset the decline.
Given the decline in patient volumes and DSH revenues, and a 63%
increase in revenues foregone due to charity care, operating
revenue decreased 7% in unaudited FY 2008. Expenses, excluding
restructuring and VERP charges, remained relatively flat driven by
a 9% decline in salaries and benefits offset by a 7% increase in
supply costs, and a 12% increase in bad debt expense. The
increase in bad debt and charity care was primarily due to the
termination of the HCI program. Patients under this program were
categorized as Medicaid but the termination of HCI, which
represents approximately $11.6 million in revenue deductions, led
these cases to be categorized as either charity care or bad debt.
As a result, operating performance, excluding one time expenses,
has deteriorated in FY 2008 with an operating loss of
$23.2 million (-7.9% operating margin) and operating cash flow
margin of $6.5 million (2.2% operating cash flow margin) compared
to an operating loss of $5.2 million (-1.6% margin) and operating
cash flow margin of $22.3 million (7.0% margin) in FY 2007.
Moody's note that a decline in accrued DSH payments in interim FY
2008 compared to interim FY 2007 also contributed to the weaker
financial performance (discussed in more detail later in the
report). Management currently is implementing numerous expense
saving measures, which has resulted in $1.6 million in expense
savings for the month of December. Given the multitude of issues,
management will face significant challenges as they attempt
execute their turnaround plan.
Despite significant operating losses, Methodists' liquidity has
only decreased to $110.3 million (136.8 days cash on hand) at
fiscal year end 2008 (December 31 year end) compared to
$114.8 million (138 days cash on hand) at FYE 2007. Methodists'
cash decline was mitigated due to an $80 million payment from the
state for DSH monies owed from prior years. The possibility
exists, however, that CMS may ask for the money back even though
this never happened before. Methodists' liquidity position
affords the organization some cushion as they attempt to turn
operations around but liquidity has declined rapidly, which was
exacerbated further by the recent market turmoil. In the fourth
quarter of FY 2008, Methodists' cash balance declined
approximately by $21 million, $7 million of which was due to
market declines. Methodist currently is 45% invested equities and
the remainder in one fixed income fund, which Moody's view as
posing concentration risk. The remainder of the decline in
liquidity was attributed to Methodist using its cash balance to
fund operations and capital expenditures, which management says
are necessary investments for future viability. While cash-to-
debt remained flat at 110% at FYE 2008, MADS coverage has declined
to 1.61 times at FYE 2008 from 2.62 times at FYE 2007. In FY
2008, approximately $32 million was spent on IT, new equipment,
and some renovations. Management expects capital spending to be
minimal (approximately $5 million) in FY 2009 as all capital
expenditures will be discretionary and reviewed on a case by case
basis. Even though Methodist's balance sheet provides some
cushion, if current operating trends continue and the cash balance
continues to decline at the current rate without the receipt of
expected DSH funds in FY 2009 to replenish the balance sheet,
there may be continued downward pressure on the rating.
Outlook
The negative outlook reflects Moody's belief that FY 2009 will be
another challenging year as Methodists' new management team
attempts to improve operations. Given the scope of challenges that
the organization faces, continued losses will continue to have a
significant negative effect on liquidity cushions.
What could change the rating--UP
Turnaround in financial performance and a sustained return to
operating margins generated in past years; volume and market share
improvement
What could change the rating--DOWN
Continued declines in patient volumes and market share leading to
further deterioration of financial performance; significant debt
increase without commensurate increase in cash flow and liquidity
Key Indicators
Assumptions & Adjustments:
-- Based on financial statements for The Methodist Hospitals,
Inc.
-- First number reflects management prepared statements ended
December 31, 2007
-- Second number reflects unaudited financial statements ended
December, 31, 2008
-- Investment returns normalized at 6% unless otherwise noted
* Inpatient admissions: 19,749; 19,268
* Total operating revenues: $318.2 million; $293.9 million
* Moody's-adjusted net revenue available for debt service:
$29.5 million; $13.6 million
* Total debt outstanding: $104.1 million; $99.9 million
* Maximum annual debt service (MADS): $11.2 million;
$11.2 million
* MADS Coverage with reported investment income: 3.30 times; .99
times
* Moody's-adjusted MADS Coverage with normalized investment
income: 2.62 times; 1.61 times
* Debt-to-cash flow: 4.63 times; 19.9 times
* Days cash on hand: 138.4 days; 136.8 days
* Cash-to-debt: 110.4%; 110.7%
* Operating margin: -1.6%; -7.9%
* Operating cash flow margin: 7.0%; 2.2%
Rated Debt (debt outstanding as of December 31, 2008)
-- Series 1996 ($14.3 million outstanding), rated Ba3
-- Series 2001 ($58.1 million outstanding), rated Ba3
The last rating action was on November 7, 2008 when the bond
rating of Methodist Hospital was downgraded to Ba3 from Ba1 and
the outlook remained negative.
MIDWAY GAMES: May Sell Mortal Kombat Franchise
----------------------------------------------
Midway Games Inc. is implementing a key employee incentive plan
which may involve the sale of the Mortal Kombat franchise,
Comicbookmovie.com reports.
According to Comicbookmovie.com, Midway Games wants to give to at
least 29 important employees some kind of protection. The
Company, says the report, is aiming to raise as much as
$3,755,000.
Comicbookmovie.com relates that the plan includes bonus payments
tied to three specific milestones, and workers who qualify for the
plan would get a percentage of these milestones. The report
states that the first milestone involves the distribution of a new
game, "Wheelman", which was already accomplished, while the second
and third milestones involve the sale of the Mortal Kombat
franchise. Stephen Totilo posted on the MTV Multiplayer blog that
the incentive plan includes clauses indicating financial rewards
tied to the sale of the Mortal Kombat franchise or the
continuation of Midway as a "going concern".
Stephen Totilo posted on the MTV Multiplayer blog that Midway
Games is hoping to hold on to Mortal Kombat. According to Mr.
Totilo, a Midway Games spokesperson Geoff Mogilner told MTV
Multiplayer that the company would prefer to keep the series. MTV
Multiplayer quoted Mr. Mogilner as saying, "It's not our goal to
sell 'Mortal Kombat'. It is something that, in the world of
scenarios, it is something that could happen here. But it's not
something that we as a company are going for."
According to MTV Multiplayer, Mr. Mogilner said when asked on
whether there have been toaks with other publishers since Midway
Games' bankruptcy filing, "There are conversations for certain.
I can't say whether this is something that would have happened
otherwise. There's definitely interest in 'Mortal Kombat'. I'm
not going to lie about that."
MTV Multiplayer states that Midway Games is working on another
installment of Mortal Kombat.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MORTGAGES LTD: Rivals Investors' Chapter 11 Plan
------------------------------------------------
Bankruptcy Law360 reports that Mortgages Ltd. has filed a
reorganization plan in its Chapter 11 case that calls for
continuing loan operations through a reorganized company and
establishing a trust to liquidate some of its assets and handle
litigation.
The report says the new company would be called Phoenix Loan
Services LLC, and it would continue to manage and administer the
debtor's loans under existing agreements.
As reported by the Troubled Company Reporter, the Investors
Committee filed its Plan of Reorganization on January 21, 2009,
after the Debtor's exclusive rights to propose its own exit plan
expired. The U.S. Bankruptcy Court for the District of Arizona
held a hearing yesterday March 4, 2009, to consider the approval
of the Investors Committee's disclosure statement.
Early this week, the official committee of unsecured creditors in
Mortgages Ltd.'s case joined the Debtor in staunch opposition to
the Investors Committee's plan, Bankruptcy Law360 said in a
separate report.
The Investors Committee was selected by the United States Trustee
to represent the interests of the investors who hold fractional
interests in the notes and deeds of trusts or hold member
interests in various MP Fund LLCs that hold fractional interests
in notes and deeds of trusts serviced by Mortgages Ltd. The
Committee is made up of pass-through participants and members of
various MP Fund LLCs.
Mortgages Ltd. said in February it "is actively pushing forward on
several projects at once. We are, of course, working with all
effected parties to put the final elements in place on a
comprehensive reorganization plan. Our plan will soon be
submitted to the court and the company will enter the final phase
of its reorganization process at which time we will be
corresponding and meeting with investors on a more frequent
basis."
In a note posted on its Web site, Mortgages Ltd. said "we are
aggressively pursuing all options related to the loans in default.
While foreclosure proceedings are complex, time consuming, and
challenging, they are in certain cases necessary. Currently, three
loan foreclosures have been completed and at least nine others are
in progress.
"We have also begun initiating actions against loan guarantors who
may soon be required to forfeit significant assets or be forced
into bankruptcy.
"Should investors obtain ownership of foreclosed properties,
Mortgages Ltd. will manage the properties on their behalf. Then,
on a case-by-case basis, the company will work with the affected
investors to devise the best strategy to help maximize the
monetary value and return. Until receipt of court approval,
Mortgages Ltd. may not pass any principal it recovers through to
investors, though that may change once a plan of reorganization is
adopted."
Investor Panel's Plan
Pursuant to the Investors Committee's Plan, a Liquidating Trust is
to be established to which all the Debtor's Non-Loan Assets shall
be transferred as of the Effective Date. The Liquidating Trustee
will be tasked with selling the Debtor's real estate and
collecting two note receivables previously owned by the Debtor
which have been transferred to the Liquidating Trust. The
Liquidating Trustee will also be tasked with pursuing all of the
Debtor's Causes of Action and Avoidance Actions against third
parties.
The Investors Committee's Plan segregates the Claims Against and
Interests in the Debtors into 13 Classes and describes the
treatment for each Class:
Class 1 -- Priority Non-Tax Claims Unimpaired; Not Entitled
to Vote
Class 2 -- Secured Tax Claims Unimpaired; Not Entitled
to Vote
Class 3 -- Stratera Secured Claims Unimpaired; Not Entitled
to Vote
Class 4 -- Artemis Secured Claims Unimpaired; Not Entitled
to Vote
Class 5 -- Arizona Bank Secured Unimpaired; Not Entitled
Claims to Vote
Class 6 -- Mechanics Lien Claims Unimpaired; Not Entitled
and Other Miscellaneous to Vote
Secured Claims
Class 7 -- RBLLC Secured Claims Impaired; Entitled to
Vote
Class 8 -- MP Funds and MP Fund Impaired; Entitled to
Investors Claims Vote
Class 9 -- VTC Fund Claims Impaired; Entitled to
Vote
Class 10 -- Pass-Through Investors Impaired; Entitled to
Claims Vote
Class 11 -- General Unsecured Impaired; Entitled to
Creditor Claims Vote
Class 12 -- Borrowers Claims Unimpaired; Not Entitled
to Vote
Class 13 -- Equity Interest Impaired; Deemed to
Reject
As of the Effective Date, the RBLLC Notes under Class 7 will be
exchanged dollar for dollar for a pro rata membership interest in
each of the Loan LLCs proportional to the fractional interest of
the Debtor in each of the ML Loans. RBLLC will also have a Class
11 General Unsecured Claim, and will be a beneficiary of the
Liquidating Trust to the extent that the unpaid obligations under
the RBLLC Notes are not exchanged for a membership interest in a
Loan LLC and for the amount of principal owed on the ML Loans that
RBLLC does not receive from the Loan LLC after the ML Notes are
paid in full or after reasonable collection eforts have been
exhausted by the Loan LLC.
On the Efective Date, each of the MP Funds under Class 8 will
relinquish its fractional interests in each of the ML Loans and
exchange those interests for membership interests in the
applicable Loan LLC that holds the aplicable ML Loan. MP Funds
will also have a Class 11 General Unsecured Claim, and will be
beneficiaries of the Liquidating Trust to the extent of the
Investors Damages.
The VTL Fund under Class 9 will retain its lien in the MP Funds
but the repayment of the obligations will be modified and resolved
by the VTL Committee and the Investors Committee pursuant to the
Plan or separately.
On the Effective Date, holders of Class 10 Pass-Through Investors
Claims will relinquish their respective fractional interests in
each of the ML Loans and exchange those interests for membership
interests in the applicable Loan LLC that holds the applicable ML
Loan. Holders of Class 10 Pass-Through Investors Claims will also
have a Class 11 General Unsecured Claim and will be beneficiaries
of the Liquidating Trust to the extent of their Investors Damages
as long as they do not exercise the Opt-Out Election.
Holders of Class 11 General Unsecured Claims will be beneficaries
of the Liquidating Trust to be established on the Effective Date
of the Plan in accordance with the Plan. Claims and portions
thereof that are treated in Class 11 and are beneficiaries of the
Liquidating Trust become Channeled Claims unless they choose the
Opt-Out Provision under the Plan.
As of the Effective Date, all Equity Interests in the Debtor will
be canceled and extinguished. Holders of Equity Interests will
receive nothing under the Plan and they are deemed to have
rejected the Plan.
Financing the Plan and Operations
In order to consummate the Plan, the Investors Committee will
obtain credit financing. The Investors Committee will obtain
financing in a sufficient amount to take out the Stratera Secured
Claims, the Priority Non-Tax Claims and the Administrative Claims.
The Investors Commitee will also obtain sufficient working capital
for the operations of the Reorganized Debtor and the Liquidating
Trust for 2009, as well as financing for the Loan LLC's to fund
the servicing and other special needs of the LLCs.
A full-text copy of the disclosure statement explaining the
Investors Committee's Plan of Reorganization for Mortgages Ltd. is
available for free at:
http://bankrupt.com/misc/MortgagesLtdDS.InvestorsCommitteePlan.pdf
A full-text copy of the Investors Committee's Plan of
Reorganization dated Jan. 21, 2009, is available for free at:
http://bankrupt.com/misc/MortgagesLtdInvestorsCommitteePlan.pdf
About Mortgages Ltd.
Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/
-- originates, invests in, sells and services its own short-term
real-estate secured loans on properties within the state of
Arizona in the US. It underwrites loans for commercial,
industrial and residential properties for acquisition,
entitlement, development, construction and investment.
Mortgages Ltd. was the subject of an involuntary chapter 7
petition dated June 20, 2008, filed by KGM Builders Inc. -- a
contractor for Grace Communities, a borrower of the company --
in the U.S. Bankruptcy Court for the District of Arizona.
Central & Monroe LLC and Osborn III Partners LLC, divisions of
Grace Communities, sought the appointment of an interim trustee
for Mortgages Ltd. in the chapter 7 proceeding.
Mortgages Ltd. is also facing lawsuits filed by Grace Communities
and Rightpath Limited Development Group for its alleged failure to
fully fund loans. Mortgages Ltd. denied the charges. It has
filed a motion to dismiss the Rightpath suit.
The Debtor's case was converted to a chapter 11 proceeding on
June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah
Sharer Curley presides over the case. Carolyn Johnsen, Esq., and
Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C.,
replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as
counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total
assets of $358,416,681 and total debts of $350,169,423.
NEIMAN MARCUS: Fitch Affirms Issuer Default Rating at 'B'
---------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating on Neiman
Marcus, Inc. and its subsidiary, The Neiman Marcus Group, Inc. at
'B' and revised the Rating Outlook to Negative from Stable. NMG
had $3 billion of debt outstanding as of Jan. 31, 2009.
Fitch has taken these rating actions based on its recovery
analysis:
-- Secured revolving credit facility affirmed at 'BB/RR1';
-- Secured term loan facility downgraded to 'B/RR4 from 'BB-
/RR2';
-- Secured debentures downgraded to 'B/RR4 from 'BB-/RR2';
-- Senior unsecured notes downgraded to 'CC/RR6' from 'B-/RR5';
-- Senior subordinated notes downgraded to 'CC/RR6' from
'CCC+/RR6'.
The Negative Outlook reflects the considerable weakness in the
luxury market and the resulting pressure on operating margins,
free cash flow and credit metrics. In line with recent earnings
results for other luxury retailers, NMG's gross margins are
expected to contract sharply and the company expects to report a
loss for the holiday quarter as it sought to align its inventory
to significantly lower sales volume. Given the long lead times in
the luxury purchasing cycle, gross margins could remain under
pressure until inventory is appropriately aligned with sales.
This combined with top line deceleration will put pressure on
EBITDA, and credit metrics could approach 10 times (x) for the
fiscal year ending Aug. 1, 2009 if EBITDA declines by more than
50% on comparable store sales decline in the low 20% range.
NMG should remain in a strong liquidity position this year with
$220 million in cash at the end of its second fiscal quarter
ending Jan. 31, 2009, and no borrowings on its $600 million credit
facility. In anticipation of a difficult retail environment and
in order to preserve liquidity, NMG has elected the payment-in-
kind option for interest payments on its $700 million senior
unsecured notes due 2015 for the period Jan. 15, 2009, through
April 14, 2009. NMG may elect to use the PIK feature on these
notes for any interest payment period through Oct. 15, 2010, which
would provide $110 million of additional liquidity in exchange for
$128 million of additional debt. NMG has also reduced its gross
capital expenditure plan for fiscal year 2009 to $115 million to
$125 million from $183 million last year. As a result of these
actions and based on Fitch's current cash flow expectations, NMG
should be able to fund 2009 working capital needs with cash on
hand.
Its borrowings needs in 2010, if any, will depend on trends in top
line growth. NMG's credit facility comes due in October 2010, and
at that point in time, if the company requires external funding
for working capital needs, it will need to execute a new facility
or issue long-term debt to address financing needs.
The ratings of the various classes of debt listed above reflect
their respective recovery prospects. Fitch's recovery analysis
assumes an enterprise value of $1.3 billion in a distressed
scenario. This is based on a distressed EBITDA of $250 million
and market valuation of 5.0x EV/EBITDA. Applying this value
across the capital structure results in outstanding recovery
prospects (over 90%) for the $600 million revolving credit
facility, which has a first lien on inventories and receivables.
The $1.625 billion term loan and the $121 million of secured
debentures are secured by a first lien on NMG's fixed and
intangible assets, and have average recovery prospects (31%-50%).
The $700 million of senior unsecured notes and the senior
subordinated notes have poor recovery prospects (less than 10%).
NEVEL PROPERTIES: Files for Chapter 11 Bankruptcy Protection
------------------------------------------------------------
Court documents say that Nevel Properties Corp. has filed for
Chapter 11 bankruptcy protection.
According to court documents, Nevel Properties claimed less than
$50,000 in assets and more than $1 million in liabilities. The
Associated Press relates that the Company will appear before the
state court for the appointment of a receiver in a foreclosure
petition against 19 of its properties.
Nevel Properties Corp. is a rental property company owned by the
Rubashkin family, which also owns the Agriprocessors
slaughterhouse.
NGPL PIPECO: Fitch Affirms Senior Unsecured Debt Ratings
--------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating and
outstanding senior unsecured debt ratings for NGPL PipeCo LLC at
'BBB-'. The Rating Outlook is Stable. The rating action affects
$3 billion of outstanding debt. NGPL is 80% owned by Myria
Acquisition Inc., a consortium of investors including two Babcock
& Brown managed funds, a Canadian pension fund and a Netherlands
pension fund, and 20% owned by Knight Inc. ('BB+'; Stable Outlook
by Fitch).
NGPL's ratings and Stable Outlook reflect the predictable cash
flows generated by its FERC regulated pipeline assets, a favorable
competitive market position, limited liquidity needs, a
conservative growth strategy and low regulatory risk. NGPL is one
of the largest interstate pipeline and storage systems in the U.S.
While the Chicago/Midwest market that it delivers into is served
by several competing pipelines, NGPL boasts favorable rate
structures and has been able to maintain its strong market
position.
Substantially all of its pipeline capacity is committed under
contracts ranging from one to five years with an average contract
length of 2.6 years. The average contract length is relatively
short. However, NGPL has been able to mitigate capacity re-
contracting risk and modestly increase its revenues from contract
rollovers. In addition, NGPL's position is enhanced by its access
to diverse and resource-rich supply areas and deliverability to a
high quality, utility dominated customer base.
The ratings also consider several offsetting factors. Based on
Fitch estimates, NGPL will continue to tend toward the higher
ranges of leverage for investment grade pipelines, with
Debt/EBITDA expected to fall between 4.0 times (x) and 5.0x over
the next several years. In addition, NGPL exhibits some
sensitivity to commodity prices through its operational efficiency
sales. As a result, absent the benefit of hedges, revenues would
be expected to decline in a softening natural gas price
environment. Finally, as with other pipeline systems, NGPL is
exposed to margin deterioration as the U.S. pipeline
infrastructure continues to evolve and natural gas supply, demand
and price dynamics change.
NORTEL NETWORKS: Hopes to Emerge from Bankruptcy Mid Year
---------------------------------------------------------
According to Financial Times, Nortel Networks Corp.'s CEO said
that the Company hopes to emerge from Chapter 11 bankruptcy
protection by the middle of the year.
The newspaper quoted Chief Executive Officer Mike Zafirovski as
saying that the Company plans to have a reorganization proposal to
creditors by next month.
"What we are now right in the middle of is development of the
business plan going forward. That is a process that we anticipate
internally will go on during the March time frame, such that we
can then sit down with the creditors, the monitor and the
administrator toward the beginning of April with the view to
putting [the plan] together," said Pavi Binning, the CRO and CFO
of the Company, according to a Globe and Mail report.
Bloomberg, Nortel Networks is losing business to Ericsson AB,
which has not been affected by the recession. According to the
report, while Nortel has lost market share and has filed for
bankruptcy, Ericsson has improved its revenues. According to its
CEO, Ericsson has been unaffected by the recession because
carriers are maintaining spending on new equipment.
NRG ENERGY: Reliant Energy Deal Cues Fitch to Hold 'B' Rating
-------------------------------------------------------------
Fitch Ratings is maintaining its Rating Watch Evolving on NRG
Energy Inc. following the announcement that NRG would be acquiring
Reliant Energy Inc.'s Texas retail business for
$287.5 million plus working capital. Fitch believes that the
acquisition of RRI's retail business is largely a credit neutral
event for the company based on both the size and structure of the
transaction. The Rating Watch Evolving continues to reflect the
unresolved nature of Exelon Corp.'s offer for NRG. While
ultimately an acquisition of NRG by the higher-rated Exelon would
be a positive for NRG's credit ratings, alternate scenarios
including other corporate transactions could have neutral or
deleterious credit implications.
The Texas retail electric business is a natural complement to
NRG's Texas merchant generation fleet. The proposed ring fenced
structure and NRG's ability and commitment to use its existing in-
the-money trades and physical power generation assets in Texas to
substantially reduce the collateral needs and obligations of the
retail business provides some comfort that the transaction will
not exacerbate any trading collateral or business risks for NRG.
As structured, the current transaction will have the retail
business operating immediately following the transaction close,
within a ring fenced structure with Merrill Lynch providing
collateral support at predetermined levels with a monthly step
down in exposure to facilitate the Merrill's extraction from
providing collateral support to the retail business.
Additionally, NRG's liquidity remains strong even with the
proposed $287.5 million cash payment for the retail business plus
a $200 million cash equity contribution to the new NRG retail
entity. Liquidity at NRG at Dec. 31, 2008 was strong with over
$3.3 billion in cash, letter of credit and revolver availability,
with $1.49 billion in unrestricted cash. NRG's pro forma
liquidity following the transaction, and a cash inflow for the
previously announced sale of MIBRAG NRG's German lignite mining
and power generating business, should still exceed $3.0 billion
with over $1.2 billion in cash based on NRG's projections.
These ratings remain on Rating Watch Evolving by Fitch:
-- Issuer Default Rating at 'B';
-- Senior secured term loan B at 'BB/RR1';
-- Senior secured revolving credit facility at 'BB/RR1';
-- Senior notes at 'B+/RR3';
-- Convertible preferred stock at 'CCC+/RR6'.
Approximately $8.1 billion of debt is affected.
Evolving signifies that Fitch may upgrade, downgrade or affirm
NRG's ratings, pending the outcome of a definitive transaction
with Exelon or other possible corporate combinations and further
review of this transaction. With regard to the Exelon offer,
Fitch is concerned with the refinancing risk associated with the
change of control provisions on NRG's debt, particularly given
current market conditions. Fitch expects to update the Rating
Watch status upon the resolution of a definitive transaction with
Exelon or upon a full review of NRG's operating strategy should a
definitive transaction fail to emerge.
PLAINS EXPLORATION: Moody's Assigns 'B1' Rating on $500MM Notes
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating (LGD 4; 67%) to
Plains Exploration and Production's $500 million pending note
offering. Moody's also affirmed PXP's Ba3 Corporate Family
Rating, Ba3 Probability of Default Rating, and B1 senior unsecured
note ratings, but changed the LGD statistics for PXP's existing
notes to LGD 4; 67% from LGD 4; 69%.
The rating outlook remains negative. The outlook reflects that
current crude oil and natural gas wellhead prices may need to rise
materially to avoid a negative rating action later this year or
during first quarter 2010. At current unhedged wellhead prices
and expected 2009-2010 hedged production and capital spending,
leverage would rise materially due to borrowing needed to fund
capital spending. While PXP has the hedging, revolver capacity,
and covenant clearance to fund its needs and obligations, it still
carries high leverage and the added leverage would not be
compatible with the ratings.
To achieve a stable outlook, a sustained rise in market prices
and/or sufficiently lower operating and sustaining capital costs
are needed for cash flow to cover leveraged full-cycle costs by a
comfortable margin. PXP would also need to attain Haynesville
Shale production growth roughly commensurate with its heavy
capital commitments.
The ratings are supported by seasoned management; its follow-
through on sharply reducing debt; pro-forma scale still compatible
with the ratings after a transforming series of acquisitions and
divestitures and very major year-end 2008 negative reserve
revisions due to low prices; sound pro-forma liquidity; a long-
lived base of California reserves needing low levels of capital
spending to sustain production; a rising core holding in the
Haynesville shale, one of the more prolific plays in North
America; a large inventory of qualified Haynseville drilling
locations; and sound production trends.
Key support for the ratings came from $1.1 billion in debt
reduction this quarter with after tax proceeds from monetizing
deeply in the money 2009 and 2010 put options on 40,000
barrels/day of oil production. PXP retained 2009 puts on 32,750
barrels/day at $55/barrel and entered into 2010 puts at $55/barrel
($50 after a $5/barrel deferred premium) on 40,000 barrels/day of
oil production.
Note proceeds will pre-fund capital spending and repay borrowings
under PXP's $2.3 billion secured borrowing base revolver which had
been backed by a $2.7 billion borrowing base. After the hedge
monetization, the borrowing base was reduced to
$1.5 billion. After the pending note offering, the borrowing base
would be further reduced by 30 cents for every dollar of senior
unsecured notes issued.
PXP holds adequate spare committed bank revolver back-up funding
for all 2009 capital spending, working capital, and debt service
need and good covenant coverage. At a $500 million note offering,
pro-forma cash at this time would approximate $350 million to $400
million, with no bank borrowings.
While completing a strategically important drilling and completion
joint venture with Chesapeake Energy on 20% of Chesapeake's
acreage in the prolific Haynesville Shale at an up-cycle
transaction price, PXP incurred a very large front-end cash outlay
and heavy subsequent capital spending commitments. PXP paid
$1.650 billion up front and, to a maximum of a second $1.650
billion in outlays over time, must fund 50% of Chesapeake's own
share of JV drilling and completion costs. A standard risk is
that the operator (Chesapeake here) could choose to run a larger,
faster drilling program than its partner could readily fund. An
operator could also choose to delay bringing completed wells on to
production to the degree that it had already brought enough wells
on production to retain its lease acreage terms (one well per 640
acres in this case).
Nevertheless, in Moody's view, the attractive well economics that
this JV provides Chesapeake, and the difficulty it would have in
replicating these terms under current sector conditions, indicate
that Chesapeake would be prone to drill and complete at a pace PXP
can continue to fund. For added protection, last month PXP
negotiated a put agreement enabling it to put 50% of its
Haynseville interest back to Chesapeake and be released from the
final $800 million of its funding commitment. While PXP would be
loathe to execute that option, it does let PXP sharply cut outlays
in need. PXP has funded approximately $100 million of spending to
date under that commitment.
PXP reduced debt by over $2 billion over the last five months with
hedge monetization proceeds and by divesting its Permian Basin
properties for over $1 billion. Production has been on a
comparatively sound trend but pro-forma production is expected to
be fairly flat in 2009 due to trimmed capital budget. PXP expects
production growth from the Haynesville and its participation in
the deep horizon Flatrock play in the shallow waters of the Gulf
of Mexico to offset natural declines elsewhere.
After major negative reserve revisions PXP carries high pro-forma
leverage on proven developed reserves approaching $10/Boe, on
total reserves (combining FAS 69 development capital spending with
debt) of just over $12/Boe; and on cash flow after sustaining
capital spending. Leverage on production, at approximately
$22,000/Boe of production, is more compatible with the current
ratings. Nevertheless, PXP faces heavy 2009 and 2010 capital
spending commitments. The low prices that drove the reserve
revisions continue, keeping hedged cash flow below expected
capital spending and, excluding the hedges, keeping unhedged cash
flow at current wellhead price realizations far below capital
spending.
PXP posted very weak drillbit reserve replacement rates and
unsustainably high replacement costs in 2008, though this was
mostly due to the major price-related negative reserve revisions
at year-end 2008 and a $1.65 billion front-end outlay to buy into
the JV with Chesapeake. Without the negative revisions, drillbit
replacement costs were in the range of a very high $70/boe and
further without the JV payment were in the range of $30/boe.
While the latter number is very high, the drillbit reserves added
themselves were restrained to a degree by low year-end 2008
prices.
Moody's last rating action for Plains Exploration was on July 2,
2008, at which time Moody's affirmed PXP's existing ratings and
assigned a negative rating outlook.
Plains Exploration & Production Company is headquartered in
Houston, Texas.
PHILLY NEWSPAPERS: To Probe Lenders' Taping of Private Meeting
--------------------------------------------------------------
Bob Warner at Philadelphia Daily News reports that Philadelphia
Newspapers LLC seeks permission from the Hon. Jean K. FitzSimon of
the U.S. Bankruptcy Court for Eastern District of Pennsylvania to
employ Elliott Greenleaf and Siedzikowski, P.C., to investigate
the major creditors' alleged unauthorized recording of
confidential pre-petition meetings between the Company and its
senior secured lenders.
Siedzikowski is a law firm in Blue Bell and is led by John M.
Elliott.
According to Philadelphia Daily, Philadelphia Newspapers claimed
that major creditors secretly recorded at least one meeting
between the newspaper and its lenders. Court documents filed by
the Company showed continuing friction with the creditors who hold
about $395 million in company debt -- money that the Company's
CEO, Brian Tierney, and other local investors borrowed to acquire
the Inquirer, the Daily News, Philly.com, and their Web site in
2006.
Philadelphia Daily relates that Judge FitzSimon has set a hearing
on Philadelphia Newspapers' motion for March 16.
Labor unions Metropolitan Region Council of Carpenters and the
Newspaper Guild were appointed to a committee representing
unsecured creditors, along with Airlie Opportunity Master Fund
Ltd., Philadelphia Daily states.
Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and
operate numerous print and online publications in the Philadelphia
market, including the Philadelphia Inquirer, the Philadelphia
Daily News, several community newspapers, the region's number one
local Web site, philly.com, and a number of related online
products. The Company's flagship publications are the Inquirer,
the third oldest newspaper in the country and the winner of
numerous Pulitzer Prizes and other journalistic recognitions, and
the Daily News.
Philadelphia Newspapers and its debtor-affiliates filed for
Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D.
Pa. Case No. 09-11204). Proskauer Rose LLP is the Debtors'
bankruptcy counsel, while Lawrence G. McMichael, Esq., at Dilworth
Paxson LLP is the local counsel. The Debtors' financial advisor
is Jefferies & Company Inc. The Debtors listed assets and debts
of $100 million to $500 million.
PLAINS EXPLORATION: S&P Affirms 'BB' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its 'BB'
corporate credit rating and 'BB' senior unsecured rating on Plains
Exploration & Production Co. The outlook is stable.
At the same time, S&P assigned a 'BB' senior unsecured rating and
a recovery rating of '4' to PXP's $500 million new senior notes
due 2016. S&P also revised the recovery rating on PXP's senior
unsecured issues to '4', indicating S&P's expectation of average
(30% to 50%) recovery in the event of a payment default, from '3'
based on the assumption that PXP will have total commitments of
$1.5 billion (commitments were $2.3 billion at year-end 2008)
for its senior secured revolving credit facility PXP will use the
proceeds from the new notes offering to reduce borrowings under
PXP's senior secured credit facility and for capital spending.
"The ratings affirmation follows the company's announcement that
it would monetize some of its crude oil hedges-(its $100 puts for
2009 and 2010) for net proceeds of about $1.1 billion," said
Standard & Poor's credit analyst Jeffrey Morrison.
PXP will use the cash proceeds from the hedge unwind along with a
portion of the new note issue to repay amounts drawn on its
revolving credit facility. PXP had about $1.3 billion drawn under
its credit facility at year-end 2008. S&P views these
transactions positively from a liquidity perspective, as PXP will
have about $500 million of cash on hand and no borrowings under
its revolving credit facility.
Pro forma for the $500 million note issue, Houston-based PXP will
have $2 billion in book debt -- about $2.2 billion when including
Standard & Poor's analytical adjustments for operating leases and
asset retirement obligations.
PRECISION PARTS: Panel Wants Proskauer Rose as Special Counsel
--------------------------------------------------------------
The official committee of unsecured creditors in Precision Parts
International Services Corp., and its debtor-affiliates' Chapter
11 cases seeks authority from the U.S. Bankruptcy Court for the
District of Delaware to employ Proskauer Rose LLP as special
corporate counsel.
Proskauer will assist Stevens & Lee, P.C., co-counsel to PPI.
Specifically, Proskauer will:
a) assist the Committee's investigation and analysis of the
financial and capital structure of the debtors in
connection with any proposed sale and disposition of the
debtors' assets;
b) assist the committee on matters involving any and all
entities as to which S&L has an actual or potential
conflict of interest; and
c) perform other legal services as requested by the Committee
to the extent not duplicative of S&L.
Peter J. Antoszyk, a member of Proskauer, tells the Court that the
firm's professional hourly rates are:
Partners $490 - $975
Senior Counsel $350 - $725
Associates $180 - $650
Paraprofessionals $70 to $275
Mr. Antoszyk assures the Court that Proskauer is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. Antoszyk can be reached at:
Proskauer Rose LLP
One International Place
Boston, MA 02110-2600
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/ --
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The Company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13289). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
PRECISION PARTS: Panel Taps NachmanHaysBrownstein as Advisors
-------------------------------------------------------------
The official committee of unsecured creditors in Precision Parts
International Services Corp., and its debtor-affiliates'
Chapter 11 cases asks for authority from the U.S. Bankruptcy Court
for the District of Delaware to employ NachmanHaysBrownstein, Inc.
as its financial advisors.
NHB will:
a) review and analyze the business, management, operations,
properties, financial condition and prospects of the
Debtors;
b) review and analyze historical financial performance, and
transactions between and among the Debtors, their creditors,
affiliates and other entities;
c) review the assumptions underlying the business plans and
cash flow projections for the assets involved in any
potential Chapter 11 plans;
d) evaluate the Debtors' capital structure and making
recommendations to the Committee with respect to the
Debtors' efforts to sell their assets and confirm a
liquidation plan;
e) determine the reasonableness of the projected performance
of the Debtors;
f) as requested, monitor, evaluate and report to the Committee
with respect to the Debtors' near term liquidity needs,
material operational changes and related financial and
operational matters;
g) as requested, review and analyze all material contracts or
agreements;
h) assist and procure and assemble any necessary validations
of asset values;
i) as requested, provide assistance to the Committee and the
Committee's legal counsel;
j) as requested, assist the Committee in preparing
documentation required in connection with creating,
supporting and opposing a plan and participating a plan and
participating in negotiations on behalf of the Committee
with the Debtors or any groups affected by a plan;
k) assist the Committee in marketing the Debtors' assets with
the intent of maximizing the value received for any assets
from any sale; and
l) as requested, provide analyses of the Debtors' financial
condition, business plans, capital spending budgets,
operating fore casts, management and the prospects for
their future performance.
NHB will be paid a monthly cap on fees: $70,000 for the period
starting on the retention date and ending on Feb. 23, 2009, and
$40,000 per month for each month thereafter.
NHB's professionals working primarily of these cases and their
hourly rates are:
Edward T. Gavin, CTP $450
Michael W. Savage $375
Hourly rates for these principals, advisors and associates range
from $250 to 525 per hour.
Mr. Gavin adds that NHB has not received a retainer.
Mr. Gavin assures the Court that NHB is a "disinterested person as
that term is defined in Section 101(14) of the Bankruptcy Code.
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/ --
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The Company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13289). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
PRECISION PARTS: Court OKs Rothschild Inc. as Investment Banker
---------------------------------------------------------------
Precision Parts International Services Corp., and its debtor-
affiliates obtained authority from the U.S. Bankruptcy Court for
the District of Delaware to employ Rothschild Inc. as investment
banker and financial advisor.
Rothschild is expected to:
a) identify and initiate potential transactions;
b) review and analyze the Debtors' assets and the operating
and financial strategies of the Debtors;
c) review and analyze the business plans and financial
projections prepared by the Debtors including, but not
limited to, testing assumptions and comparing those
assumptions to historical Debtor and industry trends;
d) evaluate the debtors' debt capacity in light of its
projected cash flow and assist in the determination of an
appropriate capital structure for the Debtors;
e) assist the Debtors and their other professionals in
reviewing the terms of any proposed transaction or other
transaction, in responding thereto and, if directed, in
evaluating alternative proposals for a transaction;
f) determine a range of value for the Debtors and any
securities that the Debtors offer or propose to offer in
connection with a transaction;
g) advise the Debtors on the risks and benefits of considering
a transaction with respect to the Debtors' intermediate and
long-term business prospects and strategic alternatives to
maximize the business enterprise value of the Debtors;
h) review and analyze any proposals the Debtors receive from
third parties in connection with a transaction or other
transaction;
i) assist or participate in negotiations with the parties in
interest, including without limitation, any current or
prospective creditors of, holders of equity in, or
claimants against the Debtors and their representatives in
connection with a transaction;
j) advise and attend meetings of the debtors' boards of
directors, security holders, creditor groups, official
constituencies and other interested parties, as necessary;
k) if requested by the Debtor, participate in hearings before
the Bankruptcy Court in which the cases are commenced and
provide relevant testimony with respect to the matters and
issues arising in connection with any proposed plan of
reorganization; and
l) render other financial advisory and investment banking
services.
Neil Augustine, a managing director of Rothschild, told the Court
that Rothschild will be paid:
a) a Monthly Fee of $125,000;
b) an Amendment Fee of $750,000;
c) a New Capital Fee equal to (i) 1.5% of the face amount of
any senior secured debt raised, (ii) 3.0% of the face
amount of any junior secured debt raised; (iii) 4.0% of the
face amount of any unsecured debt raised; and (iv) 6.0% of
any equity or hybrid capital raised, payable at the closing
of each new capital raise.
d) a Restructuring Fee of $2.25 million, payable in cash upon
the earlier of (i) the confirmation and effectiveness of a
plan or (ii) the consumption of another transaction or
comprehensive restructuring of the Debtors' capital
structure or otherwise.
e) a Credit. In addition, Rothschild will credit 100% of the
merger and acquisition fee against the restructuring fee.
In addition, Rothschild will credit against the
restructuring fee 50% of the monthly fees paid in excess of
$750,000; provided that the sum of any M&A Fee credit and
the monthly fee credit will not exceed the restructuring
fee.
Rothschild was paid a $1,250,000 merger and acquisition fee in
connection with prepetition work on behalf of the Debtors, after
the crediting of the fee, the maximum restructuring fee will be
(a) $1,000,000 less (b) 50% of the aggregate monthly fees actually
paid in excess of $750,000; provided that the monthly fee credit
will not exceed $1,000,000.
Mr. Augustine assured that Rothschild is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy Code.
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/--
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The Company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13289). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
PRECISION PARTS: Court Approves Stevens & Lee as Co-Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors in Precision Parts
International Services Corp., and its debtor-affiliates' Chapter
11 cases obtained authority from the U.S. Bankruptcy Court for the
District of Delaware to employ Stevens & Lee, P.C. as co-counsel.
S&L will:
a) advice the Committee and represent it with respect to
proposals and pleadings submitted by the Debtors or others
to the Court;
b) represent the Committee with respect to any type of
Chapter 11 plan and any proposed disposition of assets in
this cases;
c) attend meetings, draft and review pleadings and generally
advocate positions which further the interests of the
creditors represented by the Committee;
d) assist in the examination of the debtors' affairs and a
review of its operations;
e) advise the Committee about the progress of the Chapter 11
cases; and
f) perform other professional services in the best interests
of those represented by the Committee, including without
limitation those delineated in Section 1102(c) of the
Bankruptcy Code.
S&L professionals designated to represent the Committee and their
hourly rates are:
Joseph H. Huston, Jr., Shareholder $525
Maria A, Sawezuk, Of Counsel $355
Paralegals and Legal Assistants $105 - $175
Mr. Huston assures the Court that S&L is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Huston can be reached at:
Stevens & Lee, P.C.
1105 North Market Street, 7th Floor
Wilmington, DE 19801
Tel: (302) 654-5180
Fax: (302) 654-5181
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/--
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The Company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13289). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
PROPEX INC: BNP Balks at Wayzata APA; Wants Credit Bidding Allowed
------------------------------------------------------------------
BNP Paribas Securities Corp., the agent for secured lenders, is
opposing procedures proposed for selling the business of Propex
Inc.
On January 29, Propex Inc. announced that the U.S. Bankruptcy
Court in Chattanooga approved, on an interim basis, a $65 million
DIP loan facility with Wayzata Investment Partners. The final
hearing is scheduled for February 9, 2009, at 1:30 p.m. EST. This
new lending facility envisions a sale of substantially all of
Propex's assets as going concerns on or before March 24, 2009.
Propex has sought approval to sell its assets to sell
substantially all of its assets to units of Wayzata, subject to
higher and better offers at a March 23 auction. Propex has signed
a contract to sell its business to entities majority-owned by
Wayzata Opportunities Fund II LP, -- Xerxes Operating
Company, LLC and Xerxes Foreign Holdings Corp. -- for $61,560,000,
absent better bids. Pursuant to the asset purchase agreement, the
Debtors will pay Xerxes a $1,846,800 break-up fee if they
consummate a sale with a party or entity other than Xerxes.
BNP Paribas said that, together with the prepetition secured
lenders, it agrees that the Debtors' estates are a wasting asset
and that the chapter 11 cases must be brought to a conclusion in
order to halt the further depletion of the value of the Debtors'
estates. The Prepetition Lenders, therefore, support a sale of
the Debtors' estates, as well as the proposed timeline with
respect to such sale, so long as any such sale will (i) be
conducted in a manner that encourages a fair and competitive
bidding process, by incentivizing interested third parties to
participate in an auction for the Assets and (ii) result in the
best possible outcome for the Debtors' estates, creditors and
other parties-in-interest.
Gene L. Humprheys, Esq., at Bass, Berry & Sims, PLC, points out
that certain conditions and provisions in the proposed Bid
Procedures do not serve either purpose:
(a) the prohibition on credit bidding,
(b) the inclusion of an unnecessary break-up fee,
(c) the prohibition on bids for less than all of the Debtors'
assets,
(d) the cross-default provisions with respect to the DIP
Facility, and
(e) the reliance upon a stalking horse asset purchase agreement
that does not provide potential bidders with certainty as to
the purchase price they are bidding against or clarity as to
which assets and liabilities are being taken so as to allow
them to reasonably determine such purchase price themselves-
do not serve either of these purposes.
The proposed procedures chill competitive bidding and tilt the
playing field unfairly to the advantage of Xerxes.
Bankruptcy Law360 reports that private equity firm Black Diamond
Capital Management Inc. filed a separate objection to the proposed
bidding procedures, echoing BNP's sentiments.
In response, Propex's counsel, Henry J. Kaim, Esq., at King &
Spalding LLP, asserts:
(1) Credit bidding should be prohibited under the circumstances
in these cases because it will not contribute to maximizing
the value of the Debtors' estates. To the contrary, the
potential for credit bidding by some of the prepetition
secured lenders will chill bidding, discourage parties from
becoming involved in the auction process, and drive down the
purchase price of the Debtors' Assets. Further, credit
bidding is inapplicable when, as here, the validity of the
proposed credit bidder's liens are in dispute. Further, due
to the facts here, credit bidding would pose a number of
significant legal and practical challenges.
(2) the proposed breakup fee is typical in stalking horse bids in
Section 363 sales and here, is reasonable in relation to the
value of the Assets. Moreover, the breakup fee was necessary
to convince Xerxes to accept the risk of its stalking horse
bid and, importantly, incur the significant expense of time,
resources and fees in making such bid.
(3) With respect to contentions that the APA is somehow favorable
to Xerxes, the treatment is equally available to any other
bidders. Notably, any other bidder has ample opportunity to
provide "improved" terms and conditions in its own asset
purchase agreement to make its bid a "higher and better bid."
About Propex Inc.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It also produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No.
08-10249). The Debtors have selected Edward L. Ripley, Esq.,
Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in
Houston, Texas, to represent them. The Official Committee of
Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin
Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel.
Propex Inc., and its affiliates delivered to the Court a Joint
Plan of Reorganization and Disclosure Statement on October 29,
2008. Propex's exclusive period to solicit acceptances of the
Plan expires Dec. 29, 2008.
As of June 29, 2008, the Debtors' balance sheet showed total
assets of US$562,700,000, and total debts of US$551,700,000.
The Debtors have filed their Disclosure Statement and Plan of
Reorganization on October 29, 2008.
Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy
News. The newsletter tracks the chapter 11 proceedings
undertaken by Propex Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
QIMONDA N.A.: Court Approves Epiq Bankruptcy as Claims Agent
------------------------------------------------------------
Qimonda North America Corp. and its unit Qimonda Richmond, LLC,
obtained authority from the U.S. Bankruptcy Court for the District
of Delaware to employ Epiq Bankruptcy Solutions, LLC, as claims
processing and noticing agent.
Epiq is expected to act as the official claims agent of the
Bankruptcy Clerk in order to assume full responsibility for the
distribution of notices and proofs of claim, and maintenance,
processing and docketing of proofs of claim filed in the Chapter
11 cases, and to:
a) prepare and service required notices in the Chapter 11
cases;
b) at any time, upon request, satisfy the Court that it has
the capability to efficiently and effectively notice,
docket, and maintain proofs of claim and proofs of
interest;
c) file with the Clerk's Office certificates and affidavits
of service that include a copy of the particular notice
involved, an alphabetical list of persons to whom the
notice was mailed, and the date of the mailing;
d) maintain copies of all proofs of claim and proofs of
interest filed;
e) maintain official claims registers by docketing all proofs
of claim and proofs of interest on claims registers;
f) implement necessary security measures to ensure the
completeness and integrity of the claims register;
g) maintain all original proofs of claim in correct claim
number order, in an environmentally secure area and protect
the integrity of the original documents from theft and
alteration;
h) transmit to the Clerk's Office a copy of the claims
register on a regular basis;
i) maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proofs of interest, which
list will be available upon request of a party-in-interest
or the Clerk's Office;
j) provide access to the public for examination of copies of
proofs of claim or interest during regular business hours;
k) record all transfers of claims and provide notice of the
transfer;
l) promptly comply with such further conditions and
requirements as the Clerk's office or the Court may at any
time prescribe; and
m) perform other administrative and support services related
to noticing, claims, docketing, solicitation and
distribution as the Debtors or the Clerk's Office may
request.
Daniel C. McElhinney, executive director of Epiq, told the Court
that the firm's professionals' hourly rates are:
Title Rate Range Average Rate
----- ---------- ------------
Clerk $40 - $60 $50.00
Case Manager (Level 1) $125 - $175 $142.50
IT Programming Consultant $140 - $190 $165.00
Case Manager (Level 2) $185 - $220 $202.50
Senior Case Manager $225 - $275 $247.50
Senior Consultant TBD TBD*
The level of the senior consultant will vary by engagement. If
the services are required, the usual average rate is $295 per
hour.
Mr. McElhinney assured the Court that Epiq is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Qimonda N.A.
Qimonda North America Corp. and Qimonda Richmond LLC are U.S.
subsidiaries of German semiconductor memory product maker Qimonda
AG. QNA is the North American sales and marketing subsidiary of
QAG and all its subsidiaries and is also the parent of Qimonda
Richmond. QR performs part of the manufacturing of products sold
by the Global Company.
QNA and QR filed for Chapter 11 on February 20 (Bankr. D. Del.,
Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton
& Finger PA, has been tapped as counsel. In its bankruptcy
petition, QNA estimated assets and debts of more than $1 billion.
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading
global memory supplier with a diversified DRAM product portfolio.
The company generated net sales of EUR1.79 billion in financial
year 2008 and had -- prior to its announcement of a repositioning
of its business -- approximately 12,200 employees worldwide, of
which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond
(Virginia, USA). The company provides DRAM products with a focus
on infrastructure and graphics applications, using its power
saving technologies and designs. Qimonda is an active innovator
and brings high performance, low power consumption and small chip
sizes to the market based on its breakthrough Buried Wordline
technology.
Qimonda AG, filed an application with the local court in Munich,
Germany, on January 23, 2009, to open insolvency proceedings.
QIMONDA N.A.: Section 341(a) Meeting Slated for March 27
--------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, will convene
a meeting of creditors in Qimonda Richmond, LLC and Qimonda North
America Corp.'s Chapter 11 cases on March 27, 2009, at 11:30 a.m.
at J. Caleb Boggs Federal Building, 844 North King Street, 2nd
Floor, Room 2112, Wilmington, Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Qimonda N.A.
Qimonda North America Corp. and Qimonda Richmond LLC are U.S.
subsidiaries of German semiconductor memory product maker Qimonda
AG. QNA is the North American sales and marketing subsidiary of
QAG and all its subsidiaries and is also the parent of Qimonda
Richmond. QR performs part of the manufacturing of products sold
by the Global Company.
QNA and QR filed for Chapter 11 on February 20 (Bankr. D. Del.,
Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton
& Finger PA, has been tapped as counsel. In its bankruptcy
petition, QNA estimated assets and debts of more than $1 billion.
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading
global memory supplier with a diversified DRAM product portfolio.
The company generated net sales of EUR1.79 billion in financial
year 2008 and had -- prior to its announcement of a repositioning
of its business -- approximately 12,200 employees worldwide, of
which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond
(Virginia, USA). The company provides DRAM products with a focus
on infrastructure and graphics applications, using its power
saving technologies and designs. Qimonda is an active innovator
and brings high performance, low power consumption and small chip
sizes to the market based on its breakthrough Buried Wordline
technology.
Qimonda AG, filed an application with the local court in Munich,
Germany, on January 23, 2009, to open insolvency proceedings.
QIMONDA N.A.: Wants Schedules Filing Deadline Moved to May 21
-------------------------------------------------------------
Qimonda North America Corp. and its unit Qimonda Richmond, LLC,
ask the U.S. Bankruptcy Court for the District of Delaware to
extend until May 21, 2009, the time within which the Debtors must
file:
i) schedules of assets and liabilities;
ii) schedules of executory contracts and unexpired leases;
iii) schedules of current income and expenditures; and
iv) statements of financial affairs.
The Debtors, while addressing their liquidity concerns, also are
trying to stabilize their businesses in the Chapter 11 environment
and are required to dedicate many resources to addressing issues
related to their customers, vendors and employees.
In light of these significant responsibilities and the amount of
work required to complete the schedules and statements, the
Debtors likely will not be able to properly and accurately
complete schedules and statements in the prescribed time period.
The extension will enable the Debtors to assemble the necessary
information to complete the schedules and statements.
The Debtors relate that the extension is appropriate and is in the
best interests of their estates and creditors.
About Qimonda N.A.
Qimonda North America Corp. and Qimonda Richmond LLC are U.S.
subsidiaries of German semiconductor memory product maker Qimonda
AG. QNA is the North American sales and marketing subsidiary of
QAG and all its subsidiaries and is also the parent of Qimonda
Richmond. QR performs part of the manufacturing of products sold
by the Global Company.
QNA and QR filed for Chapter 11 on February 20 (Bankr. D. Del.,
Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton
& Finger PA, has been tapped as counsel. In its bankruptcy
petition, QNA estimated assets and debts of more than $1 billion.
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading
global memory supplier with a diversified DRAM product portfolio.
The company generated net sales of EUR1.79 billion in financial
year 2008 and had -- prior to its announcement of a repositioning
of its business -- approximately 12,200 employees worldwide, of
which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond
(Virginia, USA). The company provides DRAM products with a focus
on infrastructure and graphics applications, using its power
saving technologies and designs. Qimonda is an active innovator
and brings high performance, low power consumption and small chip
sizes to the market based on its breakthrough Buried Wordline
technology.
Qimonda AG, filed an application with the local court in Munich,
Germany, on January 23, 2009, to open insolvency proceedings.
RADIO ONE: S&P Downgrades Corporate Credit Rating to 'B-'
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Lanham, Maryland-based radio
broadcaster Radio One Inc. S&P lowered the corporate credit
rating to 'B-' from 'B'. The rating outlook is negative.
In addition, S&P revised the recovery rating on Radio One's
$800 million senior secured credit facility to '3', indicating
S&P's expectation of meaningful (50% to 70%) recovery in the event
of a payment default, from '1'. The issue-level rating on this
debt was lowered to 'B-' (at the same level as the 'B-' corporate
credit rating on the company) from 'BB-'.
"The ratings downgrade reflects our concern over Radio One's
ability to maintain compliance with financial covenants due to
weak radio ad demand amid the deepening recession, which S&P
expects to persist for all of 2009," said Standard & Poor's credit
analyst Michael Altberg.
Despite meaningful debt repayment in the fourth quarter and an
increase in covenant headroom, S&P does not believe the company
can achieve the same levels of debt repayment in 2009, which, in
conjunction with S&P's expectation for EBITDA declines, could
jeopardize compliance with its total debt leverage and senior debt
leverage covenants. Under S&P's baseline scenario, which
contemplates EBITDA declines in the 30% area over the next several
quarters, including S&P's assumptions around cost-cutting
initiatives, the company could violate covenants in the second
half of the year. In the current credit market, S&P is concerned
about the company's ability to absorb potential increases in
interest rate spreads that could accompany an amendment.
Radio One is primarily a radio broadcaster (80% of revenue)
targeting the African-American audience, with a portfolio of about
53 radio stations in 16 of the top 50 African-American markets.
The company also has a 51% ownership interest in Reach Media Inc.,
a programming syndication business, and a 36% interest in TV One
LLC, an African-American targeted cable television network.
RADIO SYSTEMS: S&P Changes Outlook to Negative; Keeps 'B' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Knoxville, Tennessee-based Radio Systems Corp. to
negative from stable. At the same time, S&P affirmed all of the
ratings on the company, including the 'B' corporate credit rating.
"The outlook revision reflects the company's significantly reduced
sales and EBITDA levels during the fourth quarter ending Dec. 31,
2008, and the prospects for continued weak sales performance due
to declining macroeconomic conditions," said Standard & Poor's
credit analyst Jerry Phelan. "Although RSC has recently
implemented cost-cutting efforts targeted at improving
performance, S&P believes sales will continue to be challenged in
a weak retail and economic environment, given the discretionary
nature of the company's products," he continued.
The ratings on RSC reflect its narrow business focus and
discretionary products, exposure to technology risk, a highly
competitive operating environment, recent performance decline,
some customer concentration, and risks related to outsourcing
substantially all of its manufacturing to third parties.
Given the very poor macroeconomic environment, S&P is concerned
that in response to weakening consumer demand, large retailers
could continue to reduce purchases from RSC to levels well-below
2008, which S&P believes would negatively affect RSC's
profitability and cash flows despite recent cost-reduction
initiatives. Currently, the company has satisfactory cushion
under its financial covenants. However, S&P estimates that if
2009 revenues and EBITDA fell by around 20%, RSC could be
challenged to comply with its financial covenants toward the end
of the year. S&P would consider a ratings downgrade if a covenant
violation appears likely, which S&P estimates could occur if
EBITDA falls by around 20%, resulting in adjusted leverage of
around 3.6x. If revenues during the upcoming Spring/Summer
selling season rebound from recent double-digit declines and
EBITDA margin remains near current levels, S&P would consider an
outlook revision to stable.
READER'S DIGEST: Hires Kirkland to Mull Bankruptcy, Other Options
-----------------------------------------------------------------
Reader's Digest Association Inc. has hired Kirkland & Ellis LLP to
evaluate restructuring options, which include a possible
bankruptcy filing by the Company, Tiffany Kary Bloomberg News
reports, citing a person familiar with the matter.
According to Bloomberg, the source said that Reader's Digest is
considering a pre-packaged or pre-arranged bankruptcy in which
much of the restructuring work is completed out of court.
Citing Moody's Investors Service analyst John Puchalla, Bloomberg
relates that Reader's Digest's restructuring could take "a number
of different forms: an out of court restructuring, an in-court
restructuring, or a debt buyback." According to the report, Mr.
Puchalla said that Reader's Digest has flexibility on its
covenants with lenders.
Bloomberg states that Moody's said on February 18 that Reader's
Digest's capital structure appears "unsustainable" and may breach
its covenants or restructure within the next year to 18 months.
Moody's, according to Bloomberg, said that Reader's Digest faces
pressure on cash flow from decreasing demand for its print-based
products and a decline in consumer spending. It also has a high
debt-to-EBITDA ratio, the report says, citing Moody's.
Bloomberg relates that Reader's Digest said on January 28 that it
would lay off 8% of its 3,500 workers worldwide due to a decline
in consumer spending and magazine advertising. Reader's Digest,
states Bloomberg, also said that it would require its workforce in
the U.S. to take five days of unpaid time off in each of its 2009
and 2010 fiscal years and suspend matching contributions to 401k
retirement plans.
The Financial Industry Regulatory Authority's bond-price reporting
system Trace says that Reader's Digest's $600 million in 9% notes
due 2017 recently traded at 9 cents on the dollar.
About Reader's Digest
The Reader's Digest Association, Inc., headquartered in
Pleasantville, New York, is a global publisher and direct marketer
of products including books (37% of 2007 revenue), magazines
(32%), recorded music collections and home videos (18%), and food
and gifts (9%). A group of investors led by Ripplewood Holdings
L.L.C. (Ripplewood) acquired RDA in March 2007 and combined with
Ripplewood portfolio companies WRC Media, Inc. (Weekly Reader) and
Direct Holdings U.S. Corp. (Direct Holdings) in a transaction
valued at approximately $2.4 billion (including refinanced debt).
Annual revenue approximates $2.9 billion.
On February 20, 2009, Moody's Investors Service assigned a Caa3
corporate family rating on Reader's Digest.
RIGHT START: Authorized by Court to Conduct GOB Sales
-----------------------------------------------------
Right Start Acquisition Co. and Babystyle Inc. were authorized by
the U.S. Bankruptcy Court for the Central District of California
to conduct their own going-out-of-business sales, Bloomberg's Bill
Rochelle said. The GOB sales are expected to be completed by
April 30.
According to Bloomberg, Right Start said it had almost $4 million
in inventory and a revolving credit debt of $2.6 million, in
addition to $7 million owing to suppliers. Babystyle listed
inventory of $2.7 million and revolving credit debt of $1.1
million, in addition to $2.6 million owing to suppliers.
As reported by the TCR on February 9, a note posted on Babystyle's
Web site says, "babystyle is sad to announce that we have filed
for Chapter 11 bankruptcy protection. Due to this filing we are
prohibited from accepting or issuing babystyle Gift Cards and
babystyle Merchandise Cards at any of our remaining stores. We
apologize for any inconvenience this may cause. Any pending
orders that have not yet shipped have been cancelled and your
credit card will not be charged."
Bloomberg's Bill Rochelle cited Babystyle as saying that it will
sell its assets in a "managed liquidation." According to
Bloomberg, this is the second bankruptcy filing by the two
companies.
Bloomberg reports that Right Start and Babystyle are owned by
affiliates of private-equity investor Hancock Park Associates. In
July, Hancock Park paid $5.35 million for the remaining 12 stores
belonging to EStyle Inc., a chain of 23 stores selling maternity,
baby and children's apparel when it filed in Chapter 11 in March
2008. Hancock in December 2003 bought the Right Start stores from
a company in Chapter 11 formally named FAO Inc., although better
known as the toy store FAO Schwarz. Hancock had been part of the
financing group that enabled FAO to emerge from a prior Chapter 11
case earlier in 2003.
About Right Start and Babystyle
Right Start Acquisition Co. and Babystyle Inc. sell merchandise
and apparel for infants and children. Right Start said it is the
largest national specialty retailer of juvenile products for
infants and young children. Babystyle -- http://www.babystyle.com/
-- manufactures and sells kids and baby clothes and related
products.
Right Start Acquisition Company filed for Chapter 11 on Feb. 3,
2009 (Bankr, C.D. Calif., Case No. 09-11132). Babystyle filed on
the same day (Bankr. C.D. Calif, Case No. 09-11141). Both firms
hired Hamid R. Rafatjoo, Esq., at Pachulski Stang Ziehl & Jones
LLP, as bankruptcy counsel. In it bankruptcy petition, it
estimated assets and debts of $10 to $50 million.
RITZ CAMERA: Can Hire KCC as Official Claims and Noticing Agents
----------------------------------------------------------------
Ritz Camera Centers Inc. obtained authority from the United States
Bankruptcy Court District of Delaware to employ Kurtzman Carson
Consultants LLC as the official claims and noticing agents and to
provide other essential services to the Debtor.
KCC is expected to act as the official Clerk of the Bankruptcy
Court in order to assume full responsibility for the distribution
of noticed and proofs of claim, and maintenance, processing and
docketing of proofs of claim filed in the Debtors' Chapter 11
case.
In addition, KCC is also expected to assist the Debtors with:
a) the reconciliation and resolution of claims; and
b) the preparation, mailing and tabulation of ballots for the
purpose of voting to accept or reject a plan, and acting as
solicitation agent in connection with the Chapter 11 plan
process.
Michael Frishberg, vice president of restructuring services of
Kurtzman Carson Consultants LLC told the Court that KCC will be
paid $65,000 retainer for services performed and expenses to be
incurred in this cases.
Mr. Frishberg assured the Court that KCC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Ritz Camera Centers Inc
Headquartered in Beltsville, Maryland, Ritz Camera Centers Inc. --
http://www.ritzcamera.com-- sells digital cameras and
accessories, and electronic products. The company filed for
Chapter 11 protection on February 22, 2009 (Bankr. D. Del. Case
No. 09-10617). Karen M. McKinley, Esq., and Norman L. Pernick,
Esq., at Cole Scholtz Meisel Forman Leonard, P.A., represent the
Debtor in its restructuring efforts. The Debtor proposed Thomas &
Libowitz PA as corporate counsel; FTI Consulting Inc. t/a FTI
Palladium Partners as financial advisor; and Kurtzman Carson
Consultants LLC as claims agent. When the Debtor filed for
protection from its creditors, it listed assets and debts between
$100 million and $500 million.
RIVENDELL LOAN: Fitch Downgrades Ratings on Two Classes of Notes
----------------------------------------------------------------
Fitch Ratings has downgraded, assigned a Distressed Recovery
rating, and withdrawn the ratings on two classes of notes issued
by Rivendell Loan Fund, LLC. These rating actions are effective
immediately:
-- $28,750,000 class A notes to 'C/DR6' from 'CCC';
-- $18,750,000 class B notes to 'C/DR6' from 'CCC'.
Rivendell Loan Fund, LLC was a synthetic total rate of return
collateralized loan obligation with a market value termination
trigger. Following large declines in the secondary market pricing
of leveraged loans, Rivendell Loan Fund's liquidation trigger
breached in November 2008. The trigger event was uncured and
resulted in termination of the transaction. Both classes of notes
experienced a complete loss.
RONALD COLLINS: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Ronald J. Collins
35 St. George Place
Palm Beach Gardens, FL 33418
Bankruptcy Case No.: 09-13648
Chapter 11 Petition Date: March 3, 2009
Court: Southern District of Florida (West Palm Beach)
Judge: Erik P. Kimball
Debtor's Counsel: Scott A. Underwood, Esq.
sunderwood@mws-law.com
401 E. Las Olas Blvd., #1400
Fort Lauderdale, FL 33301
Tel: (954) 712-7400
Fax: (954) 712-7401
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank Atlantic $4,635,727
2100 W. Cypress Creek Road
Fort Lauderdale, Fl 33309
United Bank Inc. $2,600,000
1085 Van Voorhis Road
Suite 150
Morgantown, WV 26505
Joan Holerman $750,000
50 Coe Road, Unit 331
Belleair, FL 33756
Veolia Water N. Amer. $467,932
Operating Svcs. LLC
Regions Bank $100,000
Chase credit card $15,252
Bank of America N.A checking acct. $6,529
Seacoast Utilities unknown
Pine Ridge Investment Group unknown
One
Florida Power & Light unknown
Beverly Golf Management Inc. unknown
Ballenisles Homeowners Assoc. unknown
Ballenisles Country Club unknown
Ballenisles Community Assoc. unknown
AT&T unknown
SAKS INC: To Tap Real-Estate Assets When in Need of More Cash
-------------------------------------------------------------
Saks Inc. Chief Financial Officer Kevin Wills told investors the
unprofitable luxury retailer has "very valuable" real-estate
assets it could tap to raise money if needed, Bloomberg's Cotten
Timberlake reported.
Saks, however, may have difficulty cashing on those assets, due to
tighter credit markets, according to Dan Fasulo, managing director
of Real Capital Analytics; Richard Hastings, who tracks the
consumer industry for Global Hunter Securities LLC; and retail
analyst Patricia Edwards.
"There is no way in a short period of time that they can
monetize their real estate and say they are a healthy company,"
Mr. Fasulo said, according to the Bloomberg report. "Retail real
estate has probably been the worst performer."
At January 31, 2009, Saks had approximately $10.3 million of cash
on hand and $156.7 million of direct outstanding borrowings on its
revolving credit facility. Funded debt totaled approximately
$640.1 million, and debt-to-capitalization was 39.9% (without
giving effect to cash on hand).
Mr. Hastings, according to Bloomberg, said Saks would most likely
try to use its real estate as collateral for borrowing if it
requires additional funding, or in the alternative, may seek to
sell and lease back its most valuable properties, including the
Fifth Avenue flagship store, or try to use the real
estate to lure a buyer for the company.
For the fourth quarter ended January 31, 2009, the Company posted
a net loss of $98.8 million, or $.72 per share, compared with a
net income of $39.5 million, or $.26 per share, for the quarter
ended Feb. 2, 2008. For the fiscal year ended January 31, 2009,
the Company recorded a net loss of $154.9 million, compared with a
net income of $47.5 million, in the prior fiscal year. The
Company's comparable store sales declined 15.3% in the fourth
quarter, which compares to a 9.0% comparable store sales gain
reported in the same period last year.
As reported by the Troubled Company Reporter on Feb 26, 2009, Saks
Inc. has dispelled rumors about the possibility of the Company
filing for bankruptcy protectio.
Saks had $2.16 billion in total assets and $1.19 billion in total
liabilities as of January 31, 2009.
About Saks Inc.
Based in New York, Saks Incorporated (NYSE: SKS) operates 53 Saks
Fifth Avenue stores, 51 OFF 5TH stores, and saks.com.
As reported by the TCR on February 9, 2009, Standard & Poor's
Ratings Services said it placed its ratings on six department
store companies, including Saks, on CreditWatch with negative
implications. S&P lowered Saks credit rating outlook to
"B/Negative/--" from "B/Stable/--". "The CreditWatch listings and
negative outlooks reflect our deepening concern about the impact
of the U.S. recession on the increasingly troubled department
store sector," said Standard & Poor's credit analyst Diane Shand,
"which felt the full brunt of the declining U.S. economy and
weakening consumer confidence in 2008."
SAKS INCORPORATED: Fitch Downgrades Issuer Default Rating to 'B-'
-----------------------------------------------------------------
Fitch Ratings has downgraded its ratings on Saks Incorporated:
-- Long-term Issuer Default Rating to 'B-' from 'B';
-- Senior secured bank credit facility to 'BB-/RR1' from
'BB/RR1';
-- Senior unsecured notes to 'B/RR3' from 'B+/RR3'.
The Rating Outlook is Negative. Saks had $640.1 million in debt
outstanding, including a $230 million 2% convertible note due
2024, as of Jan. 31, 2009.
The downgrades reflect the considerable weakness in luxury
department store sales and Saks geographic concentration in New
York -- which accounts for more than 20% of the company's sales --
and the resulting pressure on operating margins, free cash flow
and credit metrics. Fitch expects that EBITDA could be negative
in 2009 which could result in increased borrowings on its facility
to fund operations. If comparable store sales remain in the
negative low-to-mid teens range, liquidity will be adequate in
2009. However, the Negative Outlook reflects that in a more
severe or prolonged challenging sales environment, liquidity could
be pressured. These expectations incorporate the recent actions
Saks has taken to manage inventory levels, store expenses and
capital expenditures.
Saks' comparable store sales declined 15.3% in the fourth quarter
and gross margin was much worse than expected, declining over
1,600 basis points to 20.8% as Saks significantly reduced
inventory levels. Consolidated inventory as of Jan. 31, 2009
totaled $729 million, with inventory down 14.6% on a comparable
store basis, versus initial expectations of higher inventory at
the end of the fourth quarter. EBITDA was negative $74 million in
the fourth quarter, versus positive $88 million in the fourth
quarter of 2007. For 2008, comparable store sales declined 6.1%,
EBITDA excluding the discontinued Club Libby Lu operations
declined to $10.4 million from $234 million in 2007, and free cash
flow was negative. As a result, Saks ended the year with $10.3
million in cash and $156.7 million in borrowings under its credit
facility. Leverage measured by adjusted debt/EBITDAR deteriorated
to 13.0x times (x) from 4.2x at the end of 2007 while EBITDAR
coverage of interest and rents declined to 0.8x from 2.3x,
respectively.
For 2009, Fitch expects that comparable store sales could remain
considerably weak and free cash flow could be negative, resulting
in further borrowings on its $500 million credit facility. If
sales levels remain in the negative low-to-mid teens range, the
company is expected to have sufficient availability under its
facility to fund its operations. However, with a more severe
decline in comparable store sales in 2009 or with sales weakness
persisting into 2010, liquidity could be pressured in late 2009 or
in 2010.
Saks has targeted an approximate 20% decrease in inventory
receipts for 2009. The company has also taken cost cutting
measures through workforce reduction, changes to compensation and
employee benefit plans and other non-employee based cost
reductions which should result in $50 million-$60 million in
savings. In addition to cost reductions, Saks has lowered its
capital expenditure plans to approximately $60 million, from
$129 million in 2008.
The ratings on the company's $500 million secured bank facility
and the senior unsecured notes are derived from the IDR and the
relevant recovery rating. Fitch's recovery analysis assumes a
liquidation value in a distressed scenario of approximately
$900 million. Saks' senior credit facility, which is secured by
inventories and certain receivables, is rated 'BB-/RR1',
indicating outstanding (90%-100%) recovery prospects. The
facility terminates in September 2011 and is not subject to any
covenants unless the availability falls below $60 million. At
that time, it is subject to a fixed charge coverage ratio of at
least 1:1. With the company's current fixed charge coverage ratio
below 1.0x, borrowings on the facility are limited to the lower of
$440 million or its borrowing base (which could be lower during
seasonally low inventory periods given the significant decline in
inventory receipts this year). The senior unsecured notes are
rated 'B/RR3', indicating good recovery prospects (51%-70%). Debt
maturities are $0 in 2009, $46 million in December 2010 and $142
million in October 2011. The company's significant real estate
holdings, which include its Fifth Avenue New York City store,
provide a source of liquidity for the company.
SCOTTS MIRACLE-GRO: S&P Downgrades Ratings to 'BB-' from 'BB'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its ratings on
Marysville, Ohio-based The Scotts Miracle-Gro Co. to 'BB-' from
'BB'. The outlook is stable. Scotts had about $1.1 billion in
reported debt outstanding at Dec. 27, 2008.
"The downgrade reflects our belief that credit measures over the
next year will not meet our prior expectations to maintain the
'BB' rating," said Standard & Poor's credit analyst Christopher
Johnson, "including adjusted average debt to EBITDA of about
3.5x." S&P expects Scotts' EBITDA margin improvement to be
constrained by some pricing pressure from consumer trade-down and
the company's elevated input costs, which are roughly 70% hedged
for the coming year at higher costs, and higher sales and
marketing costs.
SENSATA TECHNOLOGIES: S&P Cuts Corporate Credit Rating to 'CC'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Sensata Technologies B.V. to 'CC' from 'CCC+'.
The outlook is negative. S&P also lowered the ratings on the
company's various affected debt issues. In addition, S&P placed
the 'B' rating on the company's senior secured debt on CreditWatch
with negative implications, reflecting the potential for a
downgrade if the eventual corporate credit rating is below 'CCC+'.
The rating action follows the company's announcement of two cash
tender offers for three series of notes through a modified Dutch
auction at a discount from par. The offer allows the company to
spend up to $50 million to purchase notes at a discount. "Under
its criteria, S&P views a formal cash tender offer or exchange
offer at a discount by a company under substantial financial
pressure as a distressed debt exchange and tantamount to a
default," said Standard & Poor's credit analyst Dan Picciotto.
S&P will lower its corporate credit rating on Sensata to 'SD'
(selective default) and lower S&P's ratings on issues repurchased
under the tender offer to 'D' (default) upon completion of the
offer. S&P will then, shortly thereafter, assign a new corporate
credit rating, representative of the default risk, after reviewing
the new capital structure.
S&P's downgrade does not reflect a perceived increase in Sensata's
bankruptcy risk. The tender offer, if successful, will reduce
debt and cash interest expense, and will decrease the risk of a
default. Rather, S&P's downgrade is based on the financial
pressure that Sensata is under to reduce its debt burden by
retiring debt for less than originally contracted. Similarly,
investors' potential willingness to accept a substantial discount
to contractual terms provides evidence that they have significant
doubts about receiving full payment on obligations.
As noted, S&P expects to lower the corporate credit rating to 'SD'
upon completion of the tender offer. It is S&P's preliminary
expectation that following the tender offer S&P's new corporate
credit rating on Sensata is likely to be in the 'CCC' category.
The revised capital structure would reduce Sensata's cash interest
expense and improve covenant headroom but the company will remain
highly leveraged and given difficult industry conditions,
covenants could still come under pressure in time.
SJ LAND: Asks Court Approve to Term Extension to Loan Agreement
---------------------------------------------------------------
SJ Land, LLC, moves the U.S. Bankruptcy Court for the Central
District of California for approval of the Amendment to its
Business Loan Agreement, dated as of Dec. 11, 2008, with the 1st
Pacific Bank of California. The Amendment extends the maturity
date of its prepetition loan of $6,989,037 with the Bank for a
minimum of an additional six months and by as much as a total of
18 months. The original loan matured on Dec. 11, 2008.
The Debtor's obligations to the Bank are guaranteed by the
principal of the Debtor, Nicolas A. Marsch III and his affiliates.
The Debtors tell the Court that without the extension of the
prepetition loan, the Debtor would be in default in its
obligations to the Bank, and the Bank could pursue relief from
stay in order to exercise its remedies against the Debtor. The
Bank also could pursue its remedies against Mr. Marsch and his
affiliates. This would have an extremely detrimental impact on
the Debtor's reorganization in that any such proceedings would
impair Mr. Marsch's ability to manage the Debtor's reorganization
and to provide to the Debtor financial accommodation that may be
needed by the Debtor to successfully reorganize its financial
affairs.
By the Prepetition Loan Agreements, the Bank asserts a security
interest encumbering the Debtor's interests under prepetition
agreements pursuant to which the Debtor is granted "options" to
acquire contiguous parcels of real property comprising
approximately 512 acres of undeveloped land located in the City of
San Jacinto, County of Riverside, State of California. The
Debtor's interest under the prepetition agreements are the sole
assets of the Debtor's estate. Based upon appraisals of the
properties obtained by the Debtor, the Debtor believes that it has
equity in its interests under the prepetition agreements in the
aggregate amount of approximately $59,151,862 to approximately
$70,545,636, without accounting for the security interest asserted
by the Bank.
The Amended Loan Agreements provide for an interest rate of prime
plus 1.5% p.a., compared to prime plus 0.5% p.a. under the
Prepetition Loan Agreements, with an interest rate floor of 4.5%
p.a. Aside from this nominal increase in interest rate, the
Debtors tell the Court that the Amended Loan Agreements contain no
materially adverse changes from the terms and conditions of the
Prepetition Loan Agreements. The Amended Loan Agreements will not
supersede the Prepetition Loan Agreements and will merely
constitute a modification thereof.
Pursuant to the Amendment, in order for the Debtor to obtain the
extension of the maturity date, a $500,000 reduction in the
principal is required. By paying an additional principal
reduction payment of not less than $500,000 and by replenishing
the "Interest Reserve", the Debtor may obtain an additional 12-
month extension of the maturity date of the prepetition loan.
Headquartered in San Jacinto, California, SJ Land, LLC, filed for
Chapter 11 relief on Oct. 20, 2008 (Bankr. C.D. Calif. Case No.
08-24398). The company is the developer of an approximately 512-
acre tract of real property located in San Jacinto, Riverside
County, California. The company was forced to file for bankruptcy
protection after efforts to restructure its obligations with John
A. Spyksma and Yanita J. Spyksma and Spyksma Properties, LP, and
Chad Spyksma, failed. The Debtor acquired its interests in the
property from the Spyksmas. In its schedules, the Debtor listed
total assets of $82,824,999, and total debts of $30,775,465.
SOLUTIA INC: S&P Downgrades Corporate Credit Rating to 'B'
----------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Solutia Inc. to 'B' from 'B+', and
placed the ratings on CreditWatch with negative implications.
At the same time, Standard & Poor's lowered its rating on the
company's $1.2 billion senior secured term loan facility to 'B'
from 'B+', and revised its recovery rating on the term loan to
'4', indicating average recovery (30%-50%) of principal in the
event of a default, from '3'.
The company had total adjusted debt of approximately $2 billion as
of Dec. 31, 2008. S&P adjusts its debt figure to include the
present value of capitalized operating leases, along with tax-
adjusted unfunded postretirement employee benefits and
environmental reserves.
"The downgrade reflects our expectations for a weaker operating
performance in 2009 relative to 2008, as continued global economic
weakness puts pressure on Solutia's already challenged automotive-
and housing-related end-markets," said Standard & Poor's credit
analyst Paul Kurias. "Specifically, S&P is concerned that
cushions under the company's financial covenants could erode, and
Solutia could encounter difficulty in maintaining compliance with
financial covenants that are set to tighten toward the latter half
of 2009."
"The CreditWatch placement reflects uncertainty in the company's
plan to divest its loss in its nylon business," added Mr. Kurias.
Although the company has stated that it intends to consummate a
sale by the end of the first quarter of 2009, given the current
state of the capital markets, there remains some uncertainty as to
whether this will be achieved. Still, Solutia has successfully
refocused its business on more value-added products, and reduced
its exposure to commodity-like products. Nonetheless, if the
company cannot sell the nylon business, it would continue to be
exposed to the losses that have recently characterized this
operation. The nylon business operations are focused on the
automobile industry, and S&P expects the ongoing recessionary
conditions to weaken demand in the nylon business in 2009 relative
to 2008. In the fourth quarter of 2008 the company reported a
$128 million net loss (after backing out $470 million in noncash
impairment and restructuring charges) in its discontinued
operations consisting mainly of its nylon operations. Since the
third quarter of 2008, Solutia has classified the nylon business
as a discontinued operation, and has not reported its nylon
earnings in detail. S&P estimates the key credit ratio of funds
from operations to total debt ratio as of Dec. 31, 2008 was below
S&P's expectation of 10% at the previous rating, after
incorporating the nylon business in S&P's calculations. The risks
of weak results at the nylon operation are partly mitigated by the
fact that the company's covenant calculations do not include the
nylon unit's earnings.
The rating on St. Louis-based Solutia Inc. reflects a highly
leveraged financial risk profile and a business mix that is
somewhat vulnerable to economic and cyclical downturns and
volatility in raw material, transportation, and energy costs.
These risks are tempered by meaningful contributions of relatively
stable specialty businesses in the company's portfolio, good
market shares in most businesses, geographic diversity, and an
ongoing portfolio restructuring effort aimed at improving
Solutia's cost competitiveness and profitability.
S&P will resolve the CreditWatch in the next few weeks when it
becomes clear if the company can divest its nylon business as
announced at the end of the first quarter 2009. If the Nylon
business is sold then S&P will weigh potential benefits accruing
from the resulting stability in the company's earnings profile
along with the potential benefits from an improvement in financial
profile if proceeds reduce debt meaningfully. However, if the
company is unable to sell the nylon business, and prospects for
earnings weaken below S&P's expectations so that the expected
cushion under covenants, which are currently in the high single-
digits, declines further, S&P could lower ratings. Earnings could
weaken as result of a prolonged economic slowdown, volatility in
input costs, or other business challenges. S&P could also lower
the ratings if environmental, legal, or other liabilities
unexpectedly increase to a level where the key ratio of funds from
operations to total adjusted debt remains consistently less than
10%. S&P didn't factor meaningful acquisitions, expansion plans,
or additions to environmental reserves that result in increased
debt into the rating.
SPANSION INC: Seeks Permission to Use Lenders' Cash Collateral
--------------------------------------------------------------
Spansion Inc.'s prepetition secured debt structure is comprised of
(1) a secured revolving credit facility, (2) Senior Secured
Floating Rate Notes Due 2013, and (3) a credit line with UBS Bank
USA. As of February 22, 2009, there were $702 million in
principal and approximately $8 million in accrued interest
outstanding under these debt issuances.
Excluding trade debt, Spansion's prepetition unsecured debt
includes (1) 11.25% Senior Notes Due 2016, and (2) 2.25%
Exchangeable Senior Subordinated Debentures Due 2016.
As of February 22, 2009, $457 million in principal and $18 million
in accrued interest were outstanding under these debt issuances.
The Senior Credit Facility and the FRNs are secured by liens on
substantially all of the Debtors' assets, including the Debtors'
"cash collateral" as that term is defined in Section 363 of the
Bankruptcy Code. Thus, the Debtors do not have any unencumbered
cash with which to operate their businesses.
In this regard, the Debtors ask the U.S. Bankruptcy Court for the
District of Delaware for authority:
(1) to use Cash Collateral; and
(2) to provide adequate protection to the "Secured Parties" to
secure the Prepetition Liens in connection with the
Debtors' use of Cash Collateral in which the Secured
Parties have an interest, and the diminution in the value
of the Secured Parties' interest in the Collateral.
The Debtors propose that the use of Cash Collateral would be
subject to the terms and conditions set forth in an interim
order, which include these key provisions:
A. Amount
The Debtors will be authorized to use Cash Collateral in an
aggregate amount not to exceed $150 million.
B. Term
The Debtors' ability to use Cash Collateral automatically
expires on March 29, 2009, unless terminated earlier.
C. Budget
The use of Cash Collateral will be solely for the purposes of
funding the types and corresponding amounts of itemized
expenditures enumerated in a budget. A copy of the budget,
which shows projected costs and expenses from the Petition
Date through March 29, 2009, is available for free at:
http://bankrupt.com/misc/Spansion_CashCollateralBudget.pdf
D. Prepetition Liens
The prepetition liens on the Collateral will remain in place.
As adequate protection, the FRN Noteholders and the Lenders
will be granted (i) replacement liens on all property and
assets of the Debtors, and all its proceeds, rents, or
profits, that were subject to their prepetition liens on the
Collateral and additional liens on all of the Debtors'
unencumbered assets, and (ii) to the extent that the
aggregate diminution in value of the their interests in the
Collateral from and after the Petition Date, superpriority
claims under section 507(b) of the Bankruptcy Code.
From and after the Petition Date, the Debtors will continue to
pay, as and when due, all interest, fees and expenses payable on
account of the Revolving Indebtedness as required in the Credit
Agreement and related documents. The payments will be reapplied
to reduce the principal amount of the Revolving Indebtedness --
or disgorged if all principal has been repaid in full -- as
applicable, to the extent that, pursuant to a final, non-
appealable order, the Court has determined that the Lenders are
not entitled to interest, fees and expenses payable pursuant to
the Credit Agreement Documents after the Petition Date under
Section 506(b) of the Bankruptcy Code.
From and after the Petition Date, the Debtors will continue to
make the monthly rental payments required under the Equipment
Leases as and when they become due without giving effect to any
default, acceleration or similar provisions contained in the
Equipment Leases. From and after the Petition Date, the Debtors
will also continue to pay, as and when due, the reasonable fees
and expenses of the professional advisors for the ad hoc
consortium formed by certain of the FRN Noteholders, including,
without limitation, Brown Rudnick LLP and Houlihan Lokey Howard &
Zukin Capital, Inc., as well as the reasonable fees and expenses
of HSBC as indenture trustee for the FRNs and its counsel. The
amount of the payments will be applied to reduce the principal
amount of the Noteholder Indebtedness, as applicable, to the
extent that, pursuant to a final, non-appealable order, the Court
determines that the payments from the Debtors were not entitled
to be paid pursuant to the FRNs.
On Wednesday of each week, commencing on March 11, 2009 the
Debtors will provide the Agent, Houlihan and the indenture
trustee for the FRNs with an updated rolling 4-week cash flow
statement. The Debtors will also continue to provide the Agent
and the indenture trustee of the FRNs with the financial reports
required to be provided under the Credit Agreement and the FRN
indenture on the dates when due and will provide or make
available to the parties copies of all reports filed with the
U.S. Trustee.
According to the Debtors' proposed counsel, Michael R. Lastowski,
Esq., at Duane Morris, LLP, in Wilmington, Delaware, the Debtors
-- to date -- have not yet obtained the consent of the
Prepetition Lenders to use the Cash Collateral, though the
Debtors will attempt to obtain consent after the filing of its
Request. The Debtors believe that they have obtained the consent
the Ad Hoc Consortium to use Cash Collateral. In addition, the
Debtors are currently in discussions with the Ad Hoc Consortium
regarding a potential debtor-in-possession credit facility. The
Debtors have approached other parties as well concerning a
potential DIP Facility, Mr. Lastowski says.
The Debtors clarify that they are requesting for authorization to
use Cash Collateral for a period of four weeks after the Petition
Date. Prior to the expiration of the four-week period, they will
file a motion seeking approval of a DIP Facility or will file a
motion requesting use of Cash Collateral for an additional period
of time.
Under the Budget, the Debtors intend to use Cash Collateral,
among other things:
(i) to pay (a) payroll expenses, (b) postpetition trade
amounts, and ( c) various prepetition claims paid in the
ordinary course that are the subject of other motions,
as authorized by the Court;
(ii) as working capital;
(iii) to fund critical business operations conducted by the
Debtors' foreign branches and the Foreign Subsidiaries;
and
(iv) for other general corporate purposes.
Without use of their Cash Collateral, the Debtors will likely be
forced to cease operations, layoff their employees and liquidate
their assets in a very short timeframe, Mr. Lastowski asserts.
He notes that the Debtors fund critical operations at their
foreign branches and at the Foreign Subsidiaries. With the
exception of Foreign Subsidiaries Saifun and Spansion Japan, the
foreign branches and Foreign Subsidiaries were funded entirely by
the Debtors prior to the Petition Date. Without continued
funding from the Debtors, business operations at the foreign
branches and the Foreign Subsidiaries would cease which would
have a devastating effect on the Debtors' business which relies
heavily on the operations conducted at the foreign branches and
the Foreign Subsidiaries.
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
and protecting digital content in wireless, automotive, networking
and consumer electronics applications. Spansion, previously a
joint venture of AMD and Fujitsu, is the largest company in the
world dedicated exclusively to designing, developing,
manufacturing, marketing, selling and licensing Flash memory
solutions.
Spansion Inc. and four affiliates filed voluntary petitions for
Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-
10690). Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and
Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped
as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane
Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions
LLC, is the claims agent. As of Sept. 30, 2008, Spansion
disclosed total assets of $3,840,000,000, and total debts of
$2,398,000,000.
SPANSION INC: Seeks to Hire Latham & Watkins as Counsel
-------------------------------------------------------
Spansion Inc. and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to employ
Latham & Watkins LLP, as their counsel, nunc pro tunc to the
Petition Date. The Debtors have selected Latham & Watkins
because:
(a) they have consulted the firm prior to the Petition Date
with respect to, among other things, advice regarding a
host of issues related to their restructuring efforts and
the preparation for the commencement and prosecution of
their Chapter 11 cases;
(b) the firm and its attorneys have considerable experience in
Chapter 11 reorganization cases and the fields of debtors'
and creditors' rights generally; and
(c) the firm has performed other work for the Debtors in the
past, and is therefore familiar with their corporate
structure and businesses.
Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., are expected to have primary responsibility for
providing services to the Debtors.
As attorneys to the Debtors, Latham & Watkins will:
(i) advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued management and
operation of their business and properties;
(ii) attend meetings and negotiate with representatives of
creditors and other parties-in-interest;
(iii) take all necessary action to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending any action commenced against
the Debtors, and representing the Debtors' interest in
negotiations concerning all litigation in which the
Debtors are involved, including objections to claims filed
against the estates;
(iv) prepare all motions, applications, answers, orders,
reports, and papers necessary to the administration of the
Debtors' estates;
(v) take all necessary action on behalf of the Debtors to
obtain approval of a disclosure statement and confirmation
of the Debtors' plan of reorganization;
(vi) advise the Debtors in connection with any potential sale
of assets;
(vii) appear before the Court, any appellate court, and the
United States Trustee, and protect the interests of the
Debtors' estates; and
(viii) perform all other necessary legal services for the Debtors
in connection with the Chapter 11 cases, including (a)
analyzing the Debtors' leases and executory contracts and
the assumption or assignment of those contracts, (b)
analyzing the validity of liens against the Debtors, and
(c) advising on corporate, litigation, environmental, and
other legal matters.
In addition, the Debtors have asked Latham & Watkins to serve as
special counsel to Spansion Japan Limited in connection with a
corporate reorganization proceeding commenced by Spansion Japan
on February 10, 2009. Moreover, the Debtors have also asked the
firm to advise on activities of Spansion International and
certain affiliates in non-United States jurisdictions.
The Debtors propose to pay Latham & Watkins based on the firm's
current hourly rates:
Professional Rate/hour
------------ ---------
Partners $750-$1,050
Counsel $695-$975
Associates $370-$725
Paraprofessionals $105-$620
According to the Debtors, the amount of Latham & Watkins'
postpetition retainer as of the Petition Date is $1,600,000.
Michael S. Lurey, Esq., a partner of Latham & Watkins LLP,
assures the Court that his firm does not represent any interest
adverse to the Debtors with respect to matters upon which it is
to be employed, and that his firm is a "disinterested person", as
that phrase is defined in Section 101(14) of the Bankruptcy Code
as modified by Section 1107(b).
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
and protecting digital content in wireless, automotive, networking
and consumer electronics applications. Spansion, previously a
joint venture of AMD and Fujitsu, is the largest company in the
world dedicated exclusively to designing, developing,
manufacturing, marketing, selling and licensing Flash memory
solutions.
Spansion Inc. and four affiliates filed voluntary petitions for
Chapter 11 on March 1, 2009 (Bankr. D. Del., Lead Case No. 09-
10690). Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and
Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped
as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane
Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions
LLC, is the claims agent. As of Sept. 30, 2008, Spansion
disclosed total assets of $3,840,000,000, and total debts of
$2,398,000,000.
SPANSION INC: Seeks to Hire Baker & McKenzie as Special Counsel
---------------------------------------------------------------
Spansion Inc. and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware, pursuant to
Section 327(e) of the Bankruptcy Code, to employ Baker & McKenzie
LLP as their special counsel, nunc pro tunc to the Petition Date.
The Debtors have selected Baker because the firm has provided
prepetition services related to their restructuring efforts.
Moreover, the Debtors note, Baker & McKenzie has considerable
experience in restructuring and insolvency proceedings and the
fields of debtors' and creditors' rights.
As special counsel, Baker & McKenzie will:
(a) advise the Debtors and their affiliates on employment law
issues arising in the evaluation, structuring and
implementation of their reorganization objectives in the
United States and various foreign jurisdictions;
(b) advise the Debtors in their evaluation, structuring and
implementation of various options for restructuring of the
foreign subsidiaries and foreign branches and their
businesses and operations as the Debtors consider those
option from time to time as means of augmenting the
success of their reorganization efforts;
(c) advise the Debtors on the potential effect and
consequences, under local insolvency and other law of
various Foreign Jurisdictions, of the proceedings and
developments in the Chapter 11 cases;
(d) assist the Debtors and Foreign Subsidiaries in prosecuting
insolvency proceedings under the local law of various
Foreign Jurisdictions, where the Debtors determine that
proceeding to serve the objectives being pursued in the
Chapter 11 cases;
(e) assist the Debtors in responding to actions and maneuvers
of creditors, governmental authorities and other parties
under local law of various Foreign Jurisdictions that the
parties may take or be expected potentially to take in
reaction to the events affecting the Debtors and their
affiliates leading up to the Chapter 11 cases or in
reaction to the proceedings and developments in the
Chapter 11 cases; and
(f) advise the Debtors on a range of issues under the law of
United States jurisdictions and the local law of various
Foreign Jurisdictions that may arise.
Dario Sacomani, executive vice president and chief financial
officer of Spansion, Inc., relates that the attorneys working in
Baker & McKenzie's engagement by the Debtors will include
attorneys who have experience and expertise in addressing the
relevant cross-border and local law issues and who are resident
in various offices of Baker & McKenzie and its co-members in the
United States, China, Japan, Malaysia, Singapore, Taiwan,
Thailand, Germany, Italy, the Netherlands, Sweden, and the United
Kingdom.
The Debtors propose to pay Baker pursuant to the firm's current
hourly rates:
Professional Rate/Hour
------------ ---------
Partners $300-$1,100
Counsel $320-$980
Associates $129-$910
Paraprofessionals $45-$530
According to Mr. Sacomani, these professionals are expected to
have primary responsibility for providing services to the
Debtors:
1. Shane Byrne, Esq. - corporate partner
2. Ute Krudewagen, Esq. - employment partner
3. Michael Penner, Esq. - corporate and insolvency partner
4. Douglas Young, Esq. - corporate and insolvency partner
5. Crichton Clark, Esq. - corporate and insolvency partner
6. Kelly Going, Esq. - employment associate
7. Mary Morgan, Esq. - corporate and insolvency associate
8. Sebastian Diaz-Ortiz - corporate paralegal
The Debtors will reimburse Baker & McKenzie for non-overhead,
necessary, out-of-pocket expenses.
Mr. Sacomani tells the Court that in February, the Debtors have
deposited $425,784 which serves as a security retainer for Baker
& McKenzie. As of the Petition Date, $213,876 of the retainer
remained unapplied.
Moreover, Mr. Sacomani says, within 90 days before the Petition
Date, the Debtors paid the firm $595,730, and $897,904 during the
12 months prior to the Petition Date.
Shane Byrne, Esq., a partner of Baker & McKenzie LLP, assures the
Court that his firm does not represent any other entity having an
adverse interest in matters upon which it is to be employed, and
that his firm is a "disinterested person", as that phrase is
defined in Section 101(14) of the Bankruptcy Code as modified by
Section 1107(b).
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
and protecting digital content in wireless, automotive, networking
and consumer electronics applications. Spansion, previously a
joint venture of AMD and Fujitsu, is the largest company in the
world dedicated exclusively to designing, developing,
manufacturing, marketing, selling and licensing Flash memory
solutions.
Spansion Inc. and four affiliates filed voluntary petitions for
Chapter 11 on March 1, 2009 (Bankr. D. Del., Lead Case No. 09-
10690). Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and
Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped
as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane
Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions
LLC, is the claims agent. As of Sept. 30, 2008, Spansion
disclosed total assets of $3,840,000,000, and total debts of
$2,398,000,000.
SPANSION INC: Seeks to tap Gordian as Financial Advisors
--------------------------------------------------------
Dario Sacomani, executive vice president and chief financial
offer of Spansion, Inc., relates that in light of the size and
complexity of the Debtors' Chapter 11 cases, the Debtors require
the services of seasoned and experienced financial advisors that
are initially familiar with both the Debtors' business and
operations and the Chapter 11 process.
In this regard, the Debtors seek authority from the U.S.
Bankruptcy Court for the District of Delaware to employ Gordian
Group LLC as their financial advisor, nunc pro tunc to the
Petition Date. The Debtors seek to retain Gordian because of its
extensive experience and knowledge in the field of debtors' and
creditors' rights and business reorganization.
According to Mr. Sacomani, the Debtors have employed Gordian as
their investment banker and advisor, prior to the Petition Date.
As a result of Gordian's prepetition engagement, it has become
familiar with the Debtors capital structure, financing documents
and other material information, and is able to assist the Debtors
in their restructuring efforts, Mr. Sacomani relates.
As financial advisor, Gordian will:
(a) assist the Debtors in analyzing and reviewing their
historical and projected financial statements in order to
assess capital needs under various scenarios;
(b) assist the Debtors with the development and implementation
of one or more Financial Transactions, including, without
limitation, mergers and acquisitions, advise and raising
new capital;
(c) advise and serve any potential restructuring of the
Debtors' US public indebtedness; and
(d) prepare reports and recommendations for the Debtors'
management and Board of Directors.
Pursuant to the parties' engagement letter, Gordian will be paid:
1. Fees of $75,000, payable in advance for each month,
provided that 50% of aggregate Monthly Fees earned by
Gordian will be credited against any U.S. Public
Indebtedness Fees.
2. Fees consisting of 1% of the Aggregate Debt Consideration
from any source, including, without limitation, with
respect to any debtor-in-possession; plus
3. Fees consisting of the sum of (a) 0.25% of the Aggregate
U.S. Public Indebtedness Consideration in the event of any
Financial Transaction involving U.S. Public Indebtedness
and (b) $47,500 -- the U.S. Public Indebtedness Fees.
4. Fees consisting of 0.20% of the Aggregate M&A Consideration
that is paid or payable in connection with any sale of
substantially all or a portion of the assets or outstanding
securities of the Debtors, the acquisition of substantially
all or a portion of the assets or outstanding securities of
another entity, an equity investment in the Debtors, or a
merger, consolidation, joint venture or other business
combination.
A full-text copy of the February 10 Engagement Letter is
available for free at:
http://bankrupt.com/misc/Gordian_EngagementLetter.pdf
The Debtors tell the Court that in no event will the total Debt
Transaction Fees, the U.S. Public Indebtedness Fees and the M&A
Fees exceed $5,000,000.
The Debtors propose to reimburse Gordian for out-of-pocket
expenses incurred from February 10, 2009, onward in connection
with its engagement.
The Debtors will also indemnify Gordian and its affiliates except
for losses or liability as a result of gross negligence, fraud or
willful misconduct.
Mr. Sacomani relates that prior to the Petition Date, the Debtors
paid Gordian approximately $597,740 in fees and $30,579 as
reimbursement of expenses, for prepetition services. In the 90
days prior to the Petition Date, the Debtors paid Gordian
$317,250 for fees and reimbursement of expenses, Mr. Sacomani
says.
Pursuant to the Engagement Letter, the Debtors and Gordian have
agreed that to the extent permitted by applicable law, their
disputes will be resolved through arbitration.
Peter S. Kaufman, president and head of Restructuring and
Distressed M&A at Gordian Group LLC, assures the Court that his
firm is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code.
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
and protecting digital content in wireless, automotive, networking
and consumer electronics applications. Spansion, previously a
joint venture of AMD and Fujitsu, is the largest company in the
world dedicated exclusively to designing, developing,
manufacturing, marketing, selling and licensing Flash memory
solutions.
Spansion Inc. and four affiliates filed voluntary petitions for
Chapter 11 on March 1, 2009 (Bankr. D. Del., Lead Case No. 09-
10690). Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and
Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped
as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane
Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions
LLC, is the claims agent. As of Sept. 30, 2008, Spansion
disclosed total assets of $3,840,000,000, and total debts of
$2,398,000,000.
SPANSION LLC: S&P Corrects Issue Level Ratings on Notes to 'D'
--------------------------------------------------------------
In the original version of this article, published on March 2,
2008, Standard & Poor's did not include the date on which Spansion
announced that it would not meet the scheduled interest payment on
its 11.25% senior notes.
Standard & Poor's Ratings Services said it lowered its issue-level
ratings on Sunnyvale, California-based Spansion LLC's floating-
rate senior secured notes to 'D' from 'C'. S&P also lowered the
issue-level rating on the company's 2.25% exchangeable senior
subordinated debentures to 'D' from 'C'. The action reflects the
company's filing for Chapter 11 bankruptcy on March 1, 2009.
The corporate credit and issue-level ratings on Spansion LLC's
11.25% senior unsecured notes had been lowered to 'D' from 'CCC'
on Jan. 15, 2009, following the company's announcement that it
would not make the interest payment on its 11.25% senior notes
which was due on that date. The company also failed to make the
required payment within the 30-day cure period permitted in the
indenture on the senior notes. The recovery ratings remain
unchanged.
Ratings List
Spansion Inc.
Corporate Credit Rating D/--/--
Downgraded
Spansion LLC
To From
-- ----
Senior Secured (1 issue) D C
Recovery Rating 4 4
Subordinated (1 issue) D C
Recovery Rating 6 6
STATION CASINOS: Plan Proposal Delayed or Blocked, Says Rochelle
----------------------------------------------------------------
Casino operator Boyd Gaming Corp. may have succeeded in derailing
the prepackaged bankruptcy reorganization proposed in February by
Station Casinos Inc., Bloomberg's Bill Rochelle said.
The TCR said February 24 that Boyd Gaming Corporation delivered a
non-binding preliminary indication of interest to Mr. Fertitta and
the Company's Board of Directors. In a letter dated February 23,
2009, Keith E. Smith, Boyd Gaming's president and CEO, and William
S. Boyd, the Executive Chairman of Boyd Gaming's Board, said Boyd
is interested in exploring an acquisition of 100% of Station
Casino's OpCo Assets. In addition, should Station Casinos
determine to pursue sale transactions with respect to its PropCo
Assets, Boyd would consider an acquisition that includes those
assets as well.
Boyd is offering $950 million for the OpCo Assets. "OpCo Assets"
means all of Station's assets other than (i) the assets that
secure the CMBS mortgage loan and related mezzanine financings,
due November 12, 2009 -- PropCo Assets -- and (ii) the assets that
secure Station's $250 million delay-draw term loan due February 7,
2011.
In early February, before Boyd came in to the picture, Station
Casinos, Inc., said it has elected not to make a scheduled $14.6
million interest payment on Feb. 2, 2009, and said it is
soliciting votes from its bondholders in favor of a restructuring
plan that the Company's equity sponsors and lead senior secured
lenders have already agreed to support.
In his report that the restructuring plan may have been blocked or
delayed, Mr. Rochelle noted of the announcement by Station Casinos
that (i) it has extended the deadline for soliciting votes from
bondholders to April 10, and (ii) it has reached an extension of a
standstill agreement with lenders until April 15, to afford "time
to continue discussions" on restructuring with lenders and
noteholders.
Forbearance Agreement
As reported in yesterday's Troubled Company Reporter, Station
Casinos said it has entered into forbearance agreements with the
holders of a majority in principal amount of its senior and senior
subordinated notes and the lenders holding a majority of the
commitments under its Credit Agreement, dated November 7,
2007. The Company said that these forbearance agreements will
provide the Company with additional time to continue discussions
regarding the terms of its plan of reorganization with its lenders
and the holders of its senior and senior subordinated notes.
The forbearance covers the Company's:
* 6% Senior Notes due 2012;
* 7-3/4% Senior Notes due 2016;
* 6-1/2% Senior Subordinated Notes due 2014;
* 6-7/8% Senior Subordinated Notes due 2016; and
* 6-5/8% Senior Subordinated Notes due 2018
The forbearance agreements with the holders of the Old Notes and
the lenders under the Credit Agreement will expire April 15, 2009,
unless earlier terminated pursuant to their terms.
The Company is extending the Voting Deadline on its restructuring
proposal to 5:00 p.m., New York City time, on April 10, 2009,
unless otherwise extended, in its solicitation of acceptances from
eligible institutional holders of the Old Notes.
Missed Payments
Last month, Station Casinos elected not to make a scheduled $14.6
million interest payment that was due on Feb. 2 to holders of its
$450 million 6-1/2% Senior Subordinated Notes due February 1,
2014, as it launched the proposed restructuring plan to its
bondholders. The Old 2014 Subordinated Notes provide for a 30-day
grace period which was scheduled to end March 3, 2009.
Station Casinos also elected not to make a scheduled $15.5
million interest payment that was due on February 15, 2009, to
holders of the Company's $400 million 7-3/4% Senior Notes due
August 15, 2016. The grace period with respect to the payment of
interest on the 2016 Senior Notes ends on March 17, 2009.
The Company has started votes from its bondholders in favor of the
restructuring plan that the Company's equity sponsors and lead
senior secured lenders have already agreed to support.
The Company said it is soliciting from eligible institutional
holders of the Notes ballots for a vote in favor of a plan of
reorganization for the resolution of outstanding claims against
the Company.
The Company is offering the bondholders a combination of secured
notes and cash in exchange for their outstanding bonds. Under the
plan, senior bondholders would get 50 cents on the dollar while
subordinate bondholders would receive 7 cents on the dollar in new
notes and 3 cents on the dollar in cash, Las Vegas Review states.
The Company said that affiliates of the Fertitta family and Colony
Capital have committed, as part of the restructuring plan, to
contribute in the aggregate up to $244 million in cash if an
acceptable agreement is reached with all of the Company's lending
constituents. Members of the Fertitta family that would be
participating in this contribution of additional capital include
Frank J. Fertitta III, Chairman and Chief Executive Officer of the
Company, and Lorenzo J. Fertitta, Vice Chairman of the Company.
If the Company obtains sufficient acceptances of the Plan, the
Company may determine to implement the Plan by commencing a
voluntary case under chapter 11 of the U.S. Bankruptcy Code.
About Station Casinos
Station Casinos, Inc. is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
* * *
As reported by the Troubled Company Reporter on February 24,
Moody's Investors Service said Station Casinos's ratings are not
affected by the announcement that it failed to make a February 15,
2009 scheduled interest payment on its 7.75% senior notes due
2016. Standard & Poor's Ratings Services lowered its issue-level
rating on Station Casinos' 7.75% senior notes to 'D' from 'CC'.
The rating action reflects the missed Feb. 15, 2009 interest
payment on the notes.
STATION CASINOS: S&P Downgrades Senior Notes Rating to 'D'
----------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its issue-
level rating on Las Vegas, Nevada-based Station Casinos Inc.'s
6.875% senior subordinated notes to 'D' from 'C'. The rating
action reflects the missed March 1, 2009 interest payment on the
notes. A payment default has not occurred relative to the legal
provisions of the notes, because there is a 30-day grace period to
make the payment. However, S&P considers a default to have
occurred, even if a grace period exists, when the nonpayment is a
function of the borrower being under financial stress -- unless
S&P is confident that the company will make the payment in full
during the grace period.
This rating action follows S&P's Feb. 4, 2009 research report in
which S&P lowered its corporate credit rating on Station and S&P's
issue-level rating on Station's 6.5% senior subordinated notes to
'D' following the missed Feb. 1, 2009 interest payment on the 6.5%
senior subordinated notes. At that time, Station also announced a
solicitation for votes from eligible institutional holders of its
senior unsecured and senior subordinated notes for a restructuring
plan under Chapter 11 of the U.S. Bankruptcy Code. S&P also
subsequently lowered S&P's rating on Station's 7.75% senior notes
to 'D', following a missed Feb. 15 interest payment on those
notes.
In connection with the announcement that Station has missed the
interest payment on the 6.875% senior subordinated notes, the
company also announced that it has entered into forbearance
agreements with holders of its five notes issues and its bank
group. Under the terms of the notes forbearance agreement,
noteholders have agreed to forbear from exercising remedies, with
respect to certain events of default. These include the company's
failure to pay interest due, until the earlier of
April 15, 2009 or the date on which the forbearance agreement
terminates pursuant to the terms of the agreement. Under the
terms of the credit facility forbearance agreement, lenders have
agreed to grant a limited waiver with respect to the Dec. 31, 2008
covenant violation and have agreed to forbear from exercising
their default-related rights against the company through April 15,
2009 and against certain subsidiaries of the company that
guaranteed the credit agreement through Oct. 10, 2009.
S&P expects Station to miss the upcoming interest payment on the
6.625% senior subordinated notes (due March 15) and the 6% senior
notes (due April 1). If and as these interest payments are not
made, S&P will also lower the issue-level rating on the notes to
'D'. Issue-level ratings on these two notes and on the company's
credit facility remain on CreditWatch, where S&P placed them with
negative implications on Dec. 15, 2008.
Ratings List
Station Casinos Inc.
Corp. credit rating D
Rating Lowered
To From
-- ----
6.875% sr subordinated notes D/NM-- C/Watch Neg/--
STADIUM HOLDINGS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Stadium Holdings, LLC
P.O. Box 8811
Rancho Santa Fe, CA 92067
Bankruptcy Case No.: 09-03675
Chapter 11 Petition Date: March 2, 2009
Court: District of Arizona (Phoenix)
Judge: James M. Marlar
Debtor's Counsel: Robert J. Berens, Esq.
rberens@mbwlaw.com
Mann, Berens & Wisner, LLP
3300 N. Central Avenue, #2400
Phoenix, AZ 85012
Tel: (602) 258-6200
Fax: (602) 258-6212
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor did not file a list of 20 largest unsecured creditors.
The petition was signed by Brent Langbehn, principal and
president.
SUMMIT LOGISTICS: Files for Bankruptcy to Reorganize
----------------------------------------------------
Summit Logistics & Brokerage LLC filed a Chapter 11 petition on
March 2, citing that driver contracts and financing agreements
became "unsustainable," Bloomberg's Bill Rochelle reported
Bloomberg says that the secured lender is allowing the use of cash
collateral.
Summit Logistics said in its bankruptcy petition that its assets
and debt are both less than $50 million. In its list of top
unsecured creditors, the largest are Key stops, LLC/Key oil, owed
$200,079; Transport International Pool Dept., owed $105,823; and
Indiana Dept Of Revenue, owed $104,543.
Summit Logistics & Brokerage LLC is a long- and short-haul
trucker based in Clarksville, Indiana. Summitt Trucking is
currently operating 460 trucks and 900 trailers including 90
refrigerated units. It also has approximately 150,000 sq. ft. of
warehouse space. Summitt Logistics & Brokerage, LLC and three
affiliates filed for Chapter 11 bankruptcy on March 2 (Bankr. S.D.
Ind., Case NO. 09-90630). Terry E. Hall, Esq., at Baker &
Daniels, has been tapped as counsel.
SUNGARD DATA: Fitch Downgrades Issuer Default Rating to 'B'
-----------------------------------------------------------
Fitch Ratings has downgraded these ratings of SunGard Data Systems
Inc.:
-- Issuer Default Rating to 'B' from 'B+';
-- $4.8 billion senior secured term loan due 2014 to 'BB-/RR2'
from 'BB/RR2';
-- $1 billion senior secured revolving credit facility due
2011 to 'BB-/RR2' from 'BB/RR2';
-- $250 million 4.875% senior notes due 2014 to 'B/RR4' from
'B+/RR4';
-- $1.6 billion 9.125% senior unsecured notes due 2013 to 'B-
/RR5' from 'B/RR5';
-- $500 million 10.625% senior unsecured notes due 2015 to 'B-
/RR5' from 'B/RR5';
-- $1 billion 10.25% senior subordinated notes due 2015 to
'CCC/RR6' from 'B-/RR6'.
The Rating Outlook is Negative.
The rating action and Outlook reflect:
-- Fitch's expectations that organic revenue and EBITDA at
SunGard's Financial Systems segment will decline through
at least 2009, as the ongoing turmoil in the global
financial services industry results in weaker customer
demand, increased pricing pressure as challenged customers
seek to cut costs upon renewal of multi-year contracts, and
potential reductions in the customer base due to anticipated
consolidation. Over the longer-term, Fitch believes that the
heightened degree of uncertainty around the size and profile
of the financial services industry represents an additional
source of ratings pressure.
-- Operating profits from Higher Education, Public Sector
and, to a lesser extent, SunGard's Availability
Services businesses will decline in 2009, reducing these
businesses' ability to offset expected declines in FS.
Despite the diversity and relatively insulated nature of HE
and PS customers, Fitch believes the severity of the current
economic downturn will drive budget constraints that will
reduce customer demand and drive spending cuts over the near
term, pressuring top line growth and margins. Fitch believes
that AS revenue will remain fairly stable, although margin
erosion could intensify due to increased pricing pressure.
-- Fitch's expectations that debt reduction and deleveraging
are unlikely through the medium term. Fitch believes that
SunGard is more likely to use excess cash and free cash flow
for acquisitions rather than debt reduction. Debt should
remain largely unchanged given that there are no term debt
maturities until 2013, and annual amortization under the
$4.8 billion term loan is 1%. Pro forma for $260 million of
debt reduction in January 2009 and for EBITDA from the
GLTRADE acquisition, Fitch estimates leverage (total
debt/total LTM EBITDA) of 5.6 times (x). However, Fitch's
expectations for relatively flat debt levels and operating
profit declines through at least 2009 should drive leverage
higher from these levels, most likely beyond 6x.
-- While there currently is ample cushion under the covenants
associated with SunGard's $4.8 billion senior secured term
loan and $1 billion senior secured RCF, the covenants become
increasingly restrictive annually. Given anticipated EBITDA
declines, Fitch believes there is a risk that SunGard could
breach its leverage covenant over the medium term,
potentially leading to higher pricing and/or reduced size of
the RCF. Financial covenants include maximum leverage (net
debt/total pro forma LTM EBITDA) of 6.75x, decreasing to
6.25x at Dec. 31, 2009 and 5.50x at Dec. 31, 2010; and
minimum interest coverage (net interest expense/total pro
forma LTM EBITDA) of 1.65x, increasing to 1.70x at Dec. 31,
2009, and 1.80x at Dec. 31, 2010. Additionally, capital
expenditure is limited to $400 million in 2009 and 2010,
with two-year carry forward and increases for acquisitions.
Negative ratings actions could result from:
-- Substantial revenue and profitability declines beyond
Fitch's current expectations, driven by voluntary or
involuntary customer attrition, continued reduction of new
contracts, or significant pricing pressure on new or renewed
contracts;
-- Renegotiation of the company's secured bank facilities due
to a potential or realized covenant violation results in a
significant reduction in liquidity.
The ratings could be stabilized if:
-- Visibility in the FS segment improves, with expectations
that FS will withstand the ongoing turmoil in the financial
markets without experiencing sharp top line declines and
significant customer attrition;
-- EBITDA growth at AS, HE and PS offsets the impact of the
expected decline in FS on SunGard's overall profitability.
Pro forma for the repayment of $250 million 3.75% senior notes in
January 2009 as well as $10 million of debt associated with
GLTRADE, total on balance sheet debt at Dec. 31, 2008 was
$8.6 billion and consisted primarily of: $4.8 billion of senior
secured term loans expiring 2014; approximately $500 million drawn
under the senior secured RCF expiring 2011; approximately $250
million of 4.875% senior notes due 2014; $1.6 billion of 9.125%
senior unsecured notes due 2013; $500 million of 10.625% senior
unsecured notes due 2015 and $1 billion of 10.25% senior
subordinated notes due 2015. The company's $450 million accounts
receivable (AR) securitization facility ($448 million drawn at
Sept. 30, 2008) was terminated in the fourth quarter of 2008.
SunGard repaid $364 million with cash from AR collections in the
quarter and will repay the remaining $77 million in during the
first quarter of 2009.
Fitch believes SunGard's current liquidity position is sufficient
given minimal near-term debt service needs. Pro forma for the
January 2009 debt repayment and the absorption of the remaining
$77 million of off balance sheet debt, Fitch estimates that
liquidity consisted of $638 million of cash and approximately $500
million available under its $1 billion RCF expiring 2011. In
addition, the company consistently generates free cash flow.
Fitch expects this to continue in 2009, although free cash flow
will likely be pressured relative to the estimated $357 million of
cash generated in 2008, excluding $364 million receivables
outstanding under the cancelled AR securitization facility that
were funded in the fourth quarter. Including these receivables,
Fitch estimates SunGard used $7 million of cash in 2008.
The Recovery Ratings reflect Fitch's belief that SunGard would be
reorganized rather than liquidated in a bankruptcy scenario, given
Fitch's estimates that the company's ongoing concern value of $5.8
billion is significantly higher than its projected liquidation
value, due mostly to the significant value associated with
SunGard's intangible assets. In estimating ongoing concern value,
Fitch reduced the valuation multiple to 5x from the previous 6x,
attributing recent valuation contraction among comparable
companies. Fitch discounts SunGard's normalized operating EBITDA
by 25%, approximately corresponding to the EBITDA level that would
breach the company's financial covenants.
After reductions for administrative and cooperative claims, Fitch
arrives at an adjusted reorganization value of approximately $5.2
billion. Based upon these assumptions, the senior secured debt,
including $1 billion revolving credit, and $4.8 billion of term
loan facilities recover approximately 71%-90%, resulting in 'RR2'
ratings for both tranches of debt. The senior notes' 'RR4'
recovery rating reflects the partial security these notes received
during the leveraged buyout process and Fitch's belief that the
secured bank debt is in a superior position due to its right to
the company's intellectual property. The 'RR5' recovery rating
for the $2.1 billion senior unsecured debt reflects Fitch's
estimate that 11%-30% recovery is reasonable, while the 'RR6'
recovery rating for the $1 billion of subordinated debt reflects
Fitch's belief that negligible recovery would be achievable due to
its deep subordination to other securities in the capital
structure. The analysis is pro forma for the redemption of the
January 2009 senior notes.
SYNTAX-BRILLIAN: Under Investigation by U.S. Authorities
--------------------------------------------------------
Syntax-Brillian Corp. is being probed by a federal bankruptcy
fraud task force for allegedly funneling $140 million to a Taiwan
business partner and falsifying financial reports, Bloomberg's
Bill Rochelle reported, citing U.S. authorities.
The task force, composed of the Justice Department, the
Internal Revenue Service and the Postal Inspection Service,
initiated its inquiry in January, Bloomberg reported, citing
people familiar with the probe. Separately, the Securities and
Exchange Commission has subpoenaed current and former Syntax
employees, the people said.
Bloomberg said that in four separate lawsuits filed in the U.S.,
investors are seeking millions of dollars, alleging that former
executives of the Company made false financial statements and that
they knowingly participated in the fraudulent transfer of money to
Taiwan Kolin Co., their Asian parts supplier.
Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:
BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated
debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design,
develop, and distribute high-definition televisions (HDTVs)
utilizing liquid crystal display (LCD) and, formerly, liquid
crystal (LCoS) technologies. The Debtors sell their HDTVs under
the Olevia brand name. SBC is also the sole shareholder of
Vivitar Corp., a suplier of film cameras and a line of digital
imaging products, including digital cameras.
The Debtors filed separate petitions for Chapter 11 relief on
July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A.
Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at
Greenberg Traurig LLP in New York, represent the Debtors as
counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in
Wilmington, Delaware, represents the Debtors as Delaware counsel.
Five members compose the Official Committee of Unsecured
Creditors. Pepper Hamilton, LLP represents the Committee as
counsel. Epiq Bankruptcy Solutions, LLC is the Debtors'
balloting, notice, and claims agent.
Syntax-Brillian cut a deal to sell its business assets to Olevia
International Group LLC. On Sept. 10, 2008, OIG told the
Bankruptcy Court that it won't pursue the deal, contending that
the Debtors irreparably breached various covenants and
representations contained in the Purchase Agreement, causing
various Closing Conditions to fail, and rendering it unable to
comply with its obligations under the Purchase Agreement. OIG
also accused the Debtors of violating their sale contract by
losing business from Target Corp., the Debtors' main customer.
The following day, the Debtors filed a lawsuit asking the Court to
compel Olevia International to complete the purchase. On
Oct. 10, the Bankruptcy Court denied OIG's emergency request to
excuse it from its obligations. OIG has taken an appeal of that
order.
When the Debtors filed for protection from their creditors, they
listed total assets of $175,714,000 and total debts of
$259,389,000.
TENET HEALTHCARE: Fitch Assigns 'BB-' Rating on 2015 Senior Notes
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB-/RR1' rating to Tenet Healthcare
Corp.'s new 9% sr. secured notes due 2015 and 10% sr. secured
notes due 2018. In addition, Fitch has affirmed Tenet's existing
ratings:
-- Issuer Default Rating at 'B-';
-- Secured bank facility at 'BB-/RR1';
-- Senior unsecured notes at 'B-/RR4'.
The ratings apply to approximately $4.8 billion of debt
outstanding as of Dec. 31, 2008. The Outlook is Stable.
On Feb. 26, Tenet completed a tender-and-exchange offer for
approximately $915 million of its $1 billion in 6.375% notes due
2011 and $484 million of its $600 million in 6.5% notes due 2012,
for $700 million each of new senior secured notes maturing in 2015
and 2018. The exchange was completed on a par-for-par basis and
provides investors with new notes that are guaranteed and secured
by the capital stock of certain subsidiaries. The tender-and-
exchange for the 2011 and 2012 notes improves Tenet's debt
maturity profile such that there are now limited maturities prior
to 2013, other than the company's undrawn $800 million revolver
which expires in 2011. This provides Tenet with more time in
which to complete its turn-around operations before handling any
large-scale debt maturities.
Tenet's ratings are supported by the company's recent improvements
in its operating and financial position. Tenet continues to make
measurable improvements in quality, physician recruiting, employee
satisfaction, managed care relations and expense management, which
Fitch believes is largely responsible for a meaningful increase in
volumes and profitability in 2008. In addition, Tenet's liquidity
position has benefited from the extension of its maturity schedule
as well as the execution of several transactions that generated
approximately $300 million in cash during the year. Tenet could
realize an additional
$450 million or more over the next two years from additional cash-
generating initiatives, including the recently announced
definitive agreement to divest its University of Southern
California hospitals for approximately $275 million plus working
capital.
Although Tenet has made meaningful progress in 2008, there are
still several credit concerns. In particular, Tenet continues to
consume cash, with free cash flow (defined as cash flow from
operations less capital expenditures and common dividends) of
negative $339 million in 2008. Going forward, Fitch expects Tenet
to conserve cash by reducing capital expenditures and pursuing
cost-reduction and cash-generating initiatives. However, Tenet
will ultimately need to improve its cash flow in order to maintain
its long-term financial viability. In addition, although Tenet's
operations have improved, the company continues to experience
declines in its most profitable line of business, commercial
managed care. Although portions of this decline can be attributed
to voluntary strategic actions, Fitch believes it will be
difficult for Tenet to improve its profitability and free cash
flow without stabilizing its commercial managed care business.
Finally, Fitch notes that Tenet is pursuing its turn-around
strategy in the midst of an increasingly challenging industry
environment, with declines in utilization and increases in bad
debt expense expected in 2009.
At Dec. 31, 2008, Tenet's liquidity comprised approximately $507
million in cash on hand and $444 million in availability on the
company's $800 million secured revolving credit facility maturing
in November 2011. Availability on the revolver is based on
eligible accounts receivable and is reduced by outstanding letters
of credit ($196 million at Dec. 31, 2008) plus
$100 million due to a fixed charge coverage covenant that is in
effect when availability is $100 million or less. Liquidity is
constrained by Tenet's negative free cash flow. In the near term,
Fitch expects free cash flow to remain negative but to improve as
a result of improving operations and reductions in capital
expenditures.
TNS INC: S&P Affirms Corporate Credit Rating to 'BB-'
-----------------------------------------------------
Standard & Poor's Rating Services said it affirmed its 'BB-'
corporate credit rating on Reston, Virginia-based TNS Inc.
following the company's announcement that it is acquiring VeriSign
Inc.'s Communication Service Group for $230 million in cash,
subject to working capital adjustments. The outlook is stable.
At the same time, S&P assigned a 'BB' issue rating to the
$250 million senior term loan that will be issued to finance the
acquisition. S&P assigned a '2' recovery rating to the loan,
indicating expectations for substantial (70%-90%) recovery in the
event of a payment default. S&P raised the issue ratings on TNS'
existing $193.5 million senior credit facility, consisting of a
$15 million revolving credit facility and a $225 million term loan
B (of which $178.5 million is outstanding), to 'BB' from 'BB-'.
S&P also revised the recovery rating on the facility to '2' from
'3', indicating expectations for substantial (70%-90%) recovery in
the event of a payment default.
TRIAXX FUNDING: Supplemental Indenture Won't Affect Moody's Rtng.
-----------------------------------------------------------------
Moody's Investors Service announced that it has determined that
the ratings currently assigned to Triaxx Funding High Grade I,
Ltd., will not, at this time, be reduced or withdrawn solely as a
result of the implementation of an amendment to its indenture
dated as of March 2, 2009. The Supplemental Indenture extends the
maturity date of the credit enhancement notes for three months,
from March 3, 2009 to June 3, 2009.
Triaxx Funding High Grade I, Ltd. is a Structured Investment
Vehicle - Lite managed by ICP Asset Management LLC.
The last rating action on Triaxx Funding High Grade I occurred on
March 2, 2009. On that date, the Class B-1 Mezzanine Floating
Rate Notes Due 2047 was downgraded to Ca from B1 on review for
downgrade; the Class B-2 Mezzanine Floating Rate Notes Due 2047
was downgraded to C from B2 on review for downgrade; the Class C
Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was
downgraded to C from Caa2 on review for downgrade; and Class D
Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was
downgraded to C from Ca.
TRIBUNE CO: Scripps May Buy Food Network Stake This Year
--------------------------------------------------------
Scripps Networks Interactive Inc. may buy Tribune Co.'s minority
stake in the Food Network by the end of 2009, Scripps finance
chief Joe NeCastro said, a report by Bloomberg News says.
According the report, Mr. NeCastro said in an investor conference
on March 3 that Scripps Networks is putting together a more formal
offer after negotiations were slowed by Tribune's bankruptcy
filing in December. Scripps Networks won't pay a higher multiple
than the one that its stock is trading at, Mr. NeCastro said.
As reported by the Troubled Company Reporter on Dec. 12, 2008,
Scripps said days after Tribune's bankruptcy filing that it will
still pursue Tribune's minority stake in the Food Network, albeit
the offer has been cut because of Scripps' tumbling stock price.
The report noted that Scripps shares have declined 40% since
July 1, when the company split from E.W. Scripps Co.
Tribune may only get about $400 million for the network,
CreditSights Inc. debt analyst Jake Newman said in an interview in
December. That's down from his estimate of as much as $1.05
billion in April, the report notes.
Tribune has a 31% stake in Food network while Scripps owns the
remaining 69%. According to Scripps, Food Network's operating
revenue increased 8.8% to $113 million in the third quarter of
2008. Food Network reaches more than 97 million domestic
subscribers, up from about 96 million at the end of the third
quarter 2007. "Prime-time viewership at Food Network was the
highest in the network's history during the quarter, with solid
gains among younger viewers," Mr. Lowe said, in late October, when
the company released its third quarter results.
Tribune made a $58,130,000 net income on equity investments in its
first three fiscal quarters ended Sept. 28, 2008, down from
$67,953,000 in the same period in 2007. "Net income on equity
investments for the first three quarters of 2008 included a $16
million write-down at one of the Company's interactive
investments, partially offset by an improvement at TV Food
Network," Tribune said.
About Food Network
With headquarters in New York, FOOD NETWORK --
http://www.foodnetwork.com-- is a lifestyle network and Web site
that features programs about food and cooking. Food Network can
be seen internationally in Canada, Australia, Korea, Thailand,
Singapore, the Philippines, Monaco, Andorra, Africa, France, and
the French-speaking territories in the Caribbean and Polynesia.
About Scripps Networks
Scripps Networks Interactive Inc. is the leading developer of
lifestyle-oriented content for television and the Internet, where
on-air programming is complemented with online video, social media
areas and e-commerce components on companion Web sites and
broadband vertical channels. The company's media portfolio
includes: Lifestyle Media, with popular lifestyle television and
Internet brands HGTV, Food Network, DIY Network, Fine Living
Network (FLN) and country music network Great American Country
(GAC) ; and Interactive Services, with leading online search and
comparison shopping services, Shopzilla and uSwitch.
About Tribune Company
Chicago, Illinois-based Tribune Co. -- http://www.tribune.com/--
fka Times Mirror Corporation, is America's largest employee-owned
media company, operating businesses in publishing, interactive and
broadcasting. In publishing, Tribune's leading daily newspapers
include the Los Angeles Times, Chicago Tribune, The Baltimore Sun,
Sun-Sentinel (South Florida), Orlando Sentinel, Hartford Courant,
Morning Call and Daily Press. The company's broadcasting group
operates 23 television stations, WGN America on national cable,
Chicago's WGN-AM and the Chicago Cubs baseball team.
The company filed for Chapter 11 protection on Dec. 8, 2008
(Bankr. D. Delaware Case No. 08-13141). Norman L. Pernick, Esq.,
at Cole, Schotz, Meisel, Forman & Leonard, PA, and Sidley Austion
LLP represent the company in its restructuring effort. The
company's financial advisors are Lazard Ltd. and Alvarez & Marsal
North Americal LLC. Its claims agent is Epiq Bankruptcy Solutions
LLC. As of Dec. 8, 2008, the company listed assets of
$7,604,195,000 and debts of $12,972,541,148.
(Tribune Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
TROPICANA ENTERTAINMENT: Opco Debtors Amended Bankruptcy Plan
-------------------------------------------------------------
Tropicana Entertainment LLC and 26 other debtors delivered to the
U.S. Bankruptcy Court for the District of Delaware their First
Amended Joint Plan of Reorganization and accompanying Amended
Disclosure Statement on February 26, 2009.
The OpCo Amended Disclosure Statement includes additional
information:
(1) on non-debtors Adamar of New Jersey, Inc., and Manchester
Mall, Inc., collectively referred to as the New Jersey
Entities;
(2) pertaining to regulatory gaming issues and licensing
issues;
(3) pertaining to the OpCo Debtors' means for implementation
of the Amended OpCo Plan;
(4) pertaining to claim estimates; and
(5) with respect to the terms of the OpCo Credit Facility and
the DIP Facility.
The Tropicana Casino Debtors consist of the OpCo Debtors and the
LandCo Debtors. The OpCo Debtors own, operate and have an
interest in 10 of the Debtors' casino. The eleventh casino, the
Tropicana Las Vegas Hotel and Casino, is owned and operated by
the LandCo Debtors.
The New Jersey Casino Control Commission has extended through
March 18, 2009, the deadline by which Justice Stein must complete
a sale of the Tropicana Atlantic City Casino. The NJ Commission
has suggested that the New Jersey Entities may file for Chapter
11 to consummate the sale. The OpCo Lenders may serve as the
stalking horse for the assets of the New Jersey Entities and
certain related assets owned by the Debtors with a "credit bid"
pursuant to Section 363(k) of the Bankruptcy Code.
The Amended OpCo Plan contemplates that the OpCo Debtors will
reorganize their operations without Tropicana Atlantic City,
Scott C. Butera, president and chief executive officer of the
OpCo Debtors, reports. The ultimate determination of the
Tropicana Atlantic City is not known at this time, he adds.
The Amended Disclosure Statement also reflects the adequate
protection terms in connection with the OpCo Debtors' use of cash
collateral, and the OpCo Debtors' ongoing efforts to modify those
terms as a result of the OpCo Lenders' undersecured status.
Mr. Butera adds that the Amended Disclosure Statement reflects
modified estimates of claim recovery and certain clarifications
on the plan treatment of certain classes of claims:
Class Description Treatment of Claim; Recovery
----- ----------- ----------------------------
NA DIP Facility Claims Paid in full.
Est. Recovery: 100%
Est. Amount: $66,000,000
NA Administrative Claims Paid in full.
Est. Recovery: 100%
Est. Amount: $5,300,000 to
$8,600,000
NA Priority Tax Claims Paid in full.
Est. Recovery: 100%
Est. Amount: $800,000 to
$11,400,000
1 Other Priority Claims Paid in full in Cash or other
treatment as agreed by the OpCo
Debtors and the holder.
Est. Recovery: 100%
Est. Amount: $24,000 to $760,000
2 Other Secured Claims Secured Claims will be
reinstated; paid full in Cash;
have the collateral securing
the Claim returned; or receive
other treatment as the OpCo
Debtors and the holder agree.
Est. Recovery: 100%
Est. Amount: $1,000,000 to
$16,800,000
3 OpCo Credit Facility Pro rata share of the
Secured Claims Reorganized OpCo Common Stock,
OpCo Payment, the Reorganized
OpCo Notes, and the Tropicana
Atlantic City sale proceeds, if
any
Est. Recovery: 100% recovery
Est. Amount: $552,000,000 to
$707,000,000
4 OpCo General Unsecured Pro rata share of the
Claims Subscription Rights, the
Reorganized OpCo Warrants, and
the Litigation Trust Proceeds
Est. Recovery: Less than 1%
Est. Amount: $16,400,000 to
$330,200,000
5 OpCo Noteholder Pro rata share of the
Unsecured Claims Subscription Rights, the
Litigation Trust Proceeds, and
the Reorganized OpCo Warrants
Est. Recovery: Less than 1%
Est. Amount: $998,500,000
6 OpCo Credit Facility Pro rata share of the Litigation
Deficiency Claims Trust Proceeds
Est. Recovery: Less than 1%
Est. Amount: $604,000,000 to
$759,000,000
7 Insider Claims To be paid in Cash, the pro rata
share of the Insider Claim
distribution provided that the
distribution will be subject to
the right of set-off against the
total aggregate value of the
Insider Causes of Action.
Est. Recovery: Less than 1%
Est. Amount: $23,800,000
8 Unsecured Convenience Cash equal to the lesser of 2%
Class Claim of the Allowed Unsecured
Convenience Class Claim and its
pro rata share of $300,000
Est. Recovery: 2%
Est. Amount: $10,900,000 to
$13,100,000
9 LandCo Stock Pledge None
Claims
10 Intercompany Claims None. The OpCo Debtors or the
Reorganized OpCo Debtors, as
applicable, reserve the right to
reinstate any or all
Intercompany Claims.
11 Yung Interests On the Effective Date, the Yung
Interests will be canceled and
will be of no further force and
effect, whether surrendered for
cancellation or otherwise.
12 JMBS Interests On the Effective Date, the JMBS
Interests will be canceled and
will be of no further force and
effect, whether surrendered for
cancellation or otherwise.
13 Intercompany Interests The Intercompany Interests will
not be canceled.
Classes 1 and 2 are deemed to accept the Amended OpCo Plan.
Classes 3, 4, 5, 6, 7, and 8 are entitled to vote. Classes 9,
10, 11, 12, and 13 are deemed to reject the Amended OpCo Plan.
As of February 2, 2009, the Debtors' claims agent has received
about 1,996 proofs of claim against the OpCo Debtors.
The Official Committee of Unsecured Creditors asserts that the
OpCo Plan is not confirmable as it does not provide the best
possible recovery for holders of allowed claims and that the OpCo
Debtors' conclusions as to Total Enterprise Value is
substantially less than the actual total enterprise value. The
Committee's opinion on the Plan is noted in the Amended
Disclosure Statement.
Under the Amended Disclosure Statement, Lazard Freres & Co, LLC,
estimated a Total Enterprise Value range for the Reorganized OpCo
Debtors as of the Effective Date of $325 million to $400 million,
with a midpoint of $388 million.
Copies of the blacklined versions of the Amended OpCo Plan and
the Amended Disclosure Statement and exhibits are available for
free at:
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedOpCoPlan_022609
.pdf
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedOpCoDS2_022609.
pdf
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: LandCo Debtors Amend Bankruptcy Plan
-------------------------------------------------------------
Tropicana Las Vegas Holdings, LLC, and six debtor affiliates
presented to the Court their First Amended Joint Plan of
Reorganization and Amended Disclosure Statement on February 26,
2009.
The LandCo Amended Disclosure Statement provides supplemental
information (1) pertaining to regulatory gaming and licensing
issues in Nevada, (2) in connection with the LandCo Debtors'
means for implementation of the Amended LandCo Plan, and (3)
pertaining to claim estimates.
Tropicana Las Vegas Chief Executive Officer Scott C. Butera
relates that there will be three new entities formed under and
pursuant to the LandCo Amended Plan -- New LandCo Corporation,
New LandCo Corporation Sub, and New LandCo Corporation Purchaser.
The LandCo Amended Plan does not provide for the substantive
consolidation of the LandCo Debtors. Instead, it constitutes a
separate plan of reorganization for each LandCo Debtor.
According to Mr. Butera, the Amended LandCo Plan also provides
(1) an unsolicited offer to the Official Committee of Unsecured
Creditors, defined as the Proposed Committee Settlement Offer;
and (2) a settlement with respect to the LandCo Lender Claims.
Committee Settlement Offer
The Committee Settlement Offer contemplates:
(i) an additional cash distribution to holders of Allowed
Class 4 General Unsecured Claims and Allowed Class 6
Insider Claims the lesser of (x) 25% of the Allowed Amount
of their Claims, and (y) their Pro Rata Share of $400,000;
and
(ii) certain mutual general releases between the parties on the
Effective Date.
In the absence of a Proposed Committee Settlement Offer, the
Holders of Allowed LandCo General Unsecured Claims and Allowed
Insider Claims will receive their pro rata share of the
Litigation Trust Proceeds and no other distribution from the
LandCo Debtors, the Liquidating LandCo Debtors, New LandCo, the
LandCo Agent, or any LandCo Lender.
LandCo Lender Claims Settlement
Subject to the Court's consent, the LandCo Amended Plan seeks to
implement a settlement of the LandCo Lender Claims. The salient
terms of the LandCo Claims Settlement are:
(i) The LandCo Lender Claims will be allowed by the
Confirmation Order as undisputed, non-contingent and
liquidated in the aggregate amount of $________. The
settlement amount will be exclusive of the LandCo Lenders
Adequate Protection Claim and all amounts distributed on
account of it pursuant to the Plan and the Landco Adequate
Protection Order, all amounts payable to the LandCo Agent
pursuant to the Plan, and will not be subject to set off,
recoupment, reduction or allocation.
(ii) The LandCo Credit Facility Secured Claims and the LandCo
Credit Facility Deficiency Claims will be allowed by the
Confirmation Order as undisputed, non-contingent, and
liquidated and in an amount yet to be determined.
(iii) The Confirmation Order will provide that the liens of the
LandCo Lenders in all of the LandCo Debtors' assets are
perfected and not subject to avoidance.
(iv) The LandCo Debtors' indebtedness under the LandCo Credit
Facility represented by the LandCo Lenders Claims will be
restructured into the New LandCo common stock and other
distributions.
The LandCo Amended Plan revises the category names of some class
claims and the estimated claim amounts and expected percentage
recovery for certain class claims.
The designation of Unsecured Convenience Class Claims has been
deleted.
Class Description Treatment of Claim; Recovery
----- ----------- ----------------------------
NA Administrative Claims Paid in full.
Est. Recovery: 100%
Est. Amount: $906,000 to
$1,089,000
NA Priority Tax Claims Paid in full
Est. Amount: $1,000
1 Other Priority Claims Paid in full in Cash or receive
other treatment as the LandCo
Debtors and the holder may
otherwise agree
Est. Recovery: 100%
Est. Amount: $42,000 to
$185,000
2 Other Secured Claims Including any claim for
postpetition interest accrued
until the Confirmation Date,
Other Secured Claims will be
reinstated; paid in full in
Cash; have the collateral
securing the Claim returned; or
receive other treatment as the
LandCo Debtors and the holder
may otherwise agree
Est. Recovery: 100%
Est. Amount: $36,000
3 LandCo Credit Pro rata share of the New LandCo
Facility Secured Common Stock and the right to
Claims participate in the Rights
Offering
Est. Recovery: 100%
Est. Amount: $358,000,000 to
$378,000,000
4 LandCo General Pro rata share of the
Unsecured Claims Litigation Trust Proceeds and,
if the proposed Committee
Settlement Offer is approved and
accepted, the Proposed Committee
Settlement Payment
Est. Recovery: 0% to 12.3%
Est. Amount: $3,200,000 to
$9,400,000
5 LandCo Credit Facility Pro rata share of the
Deficiency Claims Litigation Trust Proceeds
Est. Recovery: 0%
Est. Amount: $65,000,000 to
$85,000,000
6 Insider Claims In Cash, the pro rata share of
the Litigation Trust Proceeds
and, if the proposed Committee
Settlement Offer is approved and
accepted, the Proposed Committee
Settlement Payment; provided,
however, the distribution will
be subject to the right of set-
off against the total aggregate
value of the Insider Causes of
Action
Est. Recovery: Less than 1%
Est. Amount: $28,200,000
7 Intercompany Claims None
8 Yung Interests On the Effective Date, the Yung
Interests will be canceled and
will be of no further force and
effect, whether surrendered for
cancellation or otherwise.
9 Intercompany Interests None
Classes 1 and 2 are deemed to accept the LandCo Amended Plan.
Classes 3, 4, 5, and 6 are entitled to vote. Classes 7, 8, and 9
are deemed to reject the LandCo Amended Plan.
As of February 20, 2009, the LandCo Debtors' claims agent
received about 317 proofs of claims.
The Amended LandCo Disclosure Statement notes that the Committee
believes the Valuation Analysis of the LandCo Debtors is based on
flawed assumptions and that the LandCo Debtors' conclusions as to
Total Enterprise Value is substantially less than the actual
total enterprise value.
Lazard Freres & Co. LLC has estimated a Total Enterprise Value
for New LandCo as of the Effective Date of $360 million to $380
million.
Blacklined copies of the First Amended LandCo Plan, the Amended
LandCo Disclosure Statement and certain exhibits are available at
no charge at:
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedLandCoPlan_0226
09.pdf
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedLandCoDS_022609
.pdf
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Disclosure Statement Hearing Today
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware is
scheduled to hold another hearing today, at 1:00 p.m. in
Wilmington, to consider approval of the separate disclosure
statements filed by Tropicana Entertainment LLC and 26 other
debtors; and Tropicana Las Vegas Holdings, LLC, and six debtor
affiliates in relation to their bankruptcy plans.
The Court will also consider the solicitation, voting and
tabulation protocol proposed by the OpCo and LandCO Debtors.
The OpCo and LandCo Debtors have proposed similar timelines in
connection with the plan confirmation process:
Proposed Date Anticipated Event
------------- -----------------
02/17/09 Voting Record Date
02/28/09 Deadline for distribution of Solicitation
Packages and confirmation hearing notice
(subscription commencement date)
03/02/09 Deadline for parties to serve written
discovery
03/09/09 Deadline for parties to service written
responses and objections to written
discovery and date for document production
to begin on a rolling basis
03/13/09 Deadline to designate expert witnesses
03/16/09 Deadline for service of all subpoenas and
date for depositions to begin
03/19/09 Deadline for parties to exchange expert
reports and preliminary witness lists
03/23/09 Deadline to serve deposition notices
03/23/09 Plan supplement filing deadline
03/27/09 Plan objection deadline
04/03/09 Close of discovery
04/03/09 Voting deadline and Rights Offering
Expiration date
04/06/09 Deadline to exchange deposition designations
and exhibit lists and final witness lists
04/10/09 Deadline to exchange objections to deposition
designations and counter-designations
04/10/09 Deadline to file reply
04/13/09 Deadline to exchange objections to
counter-designations
04/14/09 Confirmation hearing
Various entities have filed objections, responses, or reservation
of rights related to the disclosure statements to the separate
Joint Plan of Reorganization filed by the OpCo Debtors and the
LandCo Debtors. These entities include:
1. Wilmington Trust Company
2. Official Committee of Unsecured Creditors
3. Steering Committee of Lenders
4. Park Cattle Co.
5. Onex Corporation and certain affiliates
6. Wells Fargo, N.A.
7. Icahn Associates Corp.
8. William J. Yung, III; Columbia Sussex Corporation;
Tropicana Casinos and Resorts, Inc.; Columbia Properties
Ozarks, Ltd.; Columbia Properties Indianapolis, Ltd.;
Grandview Hotels Limited Partnership; Sargasso
Corporation; Columbia Properties Mobile, Ltd.; Columbia
Properties Albuquerque, LLC; Harbour Island Owner, LLC;
W-Buttes, LLC; Belle of Orleans, LLC; LV Casino LLC;
Columbia Properties Louisville, Ltd.; Columbia Properties
Evansville, Ltd.; Columbia Properties Oklahoma City, LLC;
CW Hotel Limited Partnership; 1994 William J. Yung Family
Trust; CSC Holdings, LLC; Casuarina Cayman Holdings,
Ltd.; and JMBS Casino Trust
Objections
(A) Wilmington Trust
Wilmington Trust is successor trustee under the indenture dated
December 28, 2006, as supplemented, among Debtors Tropicana
Entertainment, LLC, formerly Wimar OpCo, LLC, and Tropicana
Finance Corp., formerly Wimar OpCo Finance Corp., as issuers, and
U.S. Bank National Association, as original Trustee, pursuant to
which the Issuers issued their 9-5/8% Senior Subordinated Notes
due 2014.
Counsel to Wilmington Trust, Tina N. Moss, Esq., at Pryor Cashman
LLP, in New York, argues that:
(a) The OpCo Debtors' Disclosure Statement fails to disclose a
myriad of issues that impact both the feasibility of the
OpCo Plan and the expected recovery to creditors on
account of their claims.
To remedy the "deficiencies," Wilmington Trust proposes
the insertion of certain language into the OpCo Plan and
OpCo Disclosure Statement. Ms. Moss relates that as of
February 10, 2009, the OpCo Debtors have not responded as
to whether the proposed language will be included in their
Plan and Disclosure Statement.
(b) Wilmington Trust is not responsible for generating lists
of the Holders of Securities as of the Voting Record Date.
This would unreasonably burden the Indenture Trustee.
Instead, the OpCo Debtors or the Securities Voting Agent,
as applicable, should directly contact the registrars of
the Securities and the Deposit Trust Company so that they
may compile and generate lists of Holders of the OpCo
Debtors' Securities as of the Voting Record Date.
(c) The establishment of the first date of the Disclosure
Statement hearing as the record date will only serve to
prejudice holders of the Notes while not providing any
corresponding benefit to the OpCo Debtors' estates.
Wilmington Trust seeks that the Court rule that the record
date for purposes of voting on the OpCo Debtors' Plan be
the date the approval order of the OpCo Disclosure
Statement is entered.
(B) Creditors Committee
The Creditors Committee intends to oppose confirmation of the
OpCo Plan and the LandCo Plan at the appropriate time. The
Committee avers that among other things, it disagrees with the
Debtors' current total enterprise valuation of the OpCo Debtors
and the LandCo Debtors.
According to Thomas F. Driscoll III, Esq., at Morris, Nichols,
Arsht & Tunnell LLP, in Wilmington, Delaware, the Creditors
Committee has submitted comments and proposed language to the
Debtors, including these:
(a) The Disclosure Statements should each emphasize that the
Creditors Committee disagrees with the Debtors' total
enterprise valuation analysis and expressly note that the
Committee intends to object to confirmation of the
proposed Plans.
(b) The OpCo Disclosure Statement should contain a more
detailed summary of the proceedings that have transpired
before the New Jersey Casino Control Commission as well as
an update with respect to recent material events.
(c) The OpCo Disclosure Statement should contain adequate
disclosure with respect to, among other things, the
material terms of the prepetition settlement agreement
with Park Cattle Company, any assumptions made by the
Debtors with respect to the agreement and with respect to
their current recovery analysis.
(d) The OpCo Disclosure Statement should include more detailed
information with respect to the terms and mechanics of the
proposed Rights Offering.
(e) The Disclosure Statements should include adequate
disclosure with respect to the Debtors' estimate and
assumptions with respect to the $200,000,000 claim that
the Yung Entities have indicated they will assert against
the Debtors, and the potential impact of it on creditor
recoveries.
(f) Both Disclosure Statements should contain a summary
analysis of the licensing requirements for each of the
reorganized Debtors, its officers and directors as well as
equity holders of the reorganized entities.
(g) The Disclosure Statements should contain additional
disclosure with respect to the executory contracts and
unexpired leases proposed to be rejected, the potential
scope of rejection claims that may be asserted in the
Debtors' Chapter 11 cases, and the impact of those claims
upon recoveries to general unsecured creditors.
The Creditors Committee intends to continue its efforts to work
with the Debtors to consensually resolve its concerns regarding
the proposed Disclosure Statements. To the extent its concerns
are not adequately addressed on or before the Disclosure
Statement hearing, the Creditors Committee clarifies that it
opposes the relief requested in the Disclosure Statement Motions.
The Creditors Committee also reserves all of its rights in
connection with any objection or response submitted by other
parties-in-interest, and reserves the right to respond to those.
(C) Park Cattle
Park Cattle is the landlord under certain leases that relate to
property operated by OpCo Debtors Tahoe Horizon, LLC, and
Columbia Properties Tahoe, LLC. Park Cattle owns the land on
which Horizon Casino and Resort is located in Lake Tahoe, Nevada.
This property is subject to two ground leases. Park Cattle also
owns the land and the facility in Lake Tahoe, Nevada, where
MontBleu Resort Casino and Spa is operated. This property is
subject to a ground and facility lease.
Horizon Casino and MontBleu represent two of the 10 casino
properties operated by the OpCo Debtors, Rachel B. Mersky, Esq.,
at Monzack Mersky McLaughlin and Browder, P.A., in Wilmington,
Delaware, notes.
The OpCo Debtors have failed to provide any information in the
OpCo Disclosure Statement regarding their proposed treatment of
the Horizon Leases and the MontBleu Lease, a certain stipulated
judgment against Tropicana Entertainment LLC and all the OpCo
Debtors, and the OpCo Debtors' continuing obligations, Ms. Mersky
contends.
The OpCo Debtors have failed to provide any information regarding
their proposed treatment of the Horizon Leases and the MontBleu
Lease, the Stipulated Judgment, or the effect of any possible
rejection of the Leases or the OpCo Debtors' failure to comply
with the Stipulated Judgment on the OpCo Debtors' estates, she
adds.
Parties Reserve Rights
Meanwhile, Mr. Yung and certain related parties, Well Fargo,
Onex, Icahn, and the Lenders Steering Committee seek to preserve
their rights with respect to the Plans.
Mr. Yung and certain related parties aver that they have
significant claims against the Debtors' estates, aggregating more
than $200,000,000, which are "woefully underestimated" in the
Disclosure Statements. Mr. Yung, et al., say they intend to
vigorously pursue their claims and interests against the Debtors.
They also question the Debtors' ability to meet the standards for
confirmation imposed by the Bankruptcy Code and expect to raise
significant objections to confirmation of the Plans.
Mr. Yung, et al., reserve their rights as a precaution to ensure
that they can raise any objections to confirmation of a plan at
the appropriate time.
Wells Fargo, as agent for the LandCo Lenders, tells the Court it
is working with the Debtors to address and resolve certain
concerns and potential objections relating to the LandCo Debtors'
Disclosure Statement Motion. Wells Fargo reserves its right to
supplement its filing before or at the Disclosure Statement
Hearing in the event it is unable to resolve its concerns on a
consensual basis.
Icahn is a member of the steering committee of lenders. Icahn
has been in discussions with the Debtors to resolve its issues
and objections. Pending negotiations, Icahn reserves any and all
of its rights to object to the Disclosure Statements, supplement
its objection with further argument, take discovery, and present
evidence as well as testimony on the Disclosure Statement
Motions.
The Lenders Steering Committee note that it has been in
discussions with the Debtors to resolve its issues with the
proposed OpCo Plan. The Lenders Steering Committee anticipates
resolving its issues with the Debtors before the Disclosure
Statement Motion hearing. Pending completion of negotiations
with the Debtors, the Lenders Steering Committee reserves its
rights to object to the Motion and to supplement its reservation
of rights.
Onex also relates that it is in discussions with the LandCo
Debtors, together with Wells Fargo, as agent for the LandCo
Lenders, regarding certain concerns and potential objections
relating to the proposed LandCo Disclosure Statement, the
proposed LandCo Plan, and pending LandCo Disclosure Statement
Motion. Onex is optimistic that the LandCo Debtors will address
its concerns through amendment to the LandCo Disclosure Statement
and Plan. Onex, nevertheless, reserves its right to supplement
its filing before the LandCo Disclosure Statement Motion hearing
in the event it is unable to resolve its concerns on a consensual
basis.
Employee's Plan Objection
In a letter to the Court, Sandra Hausaman complained that the
separate Joint Plans of Reorganization filed by the OpCo Debtors
and the LandCo Debtors "has a total disregard for its employees."
"I doubt that any restructuring will change their practices," Ms.
Hausaman contends. Ms. Hausaman relates that she filed a
complaint against the Debtors on December 26, 2007, for unfair
termination. She said the Debtors have not contacted her nor have
they "tried to rectify the situation."
OpCo Debtors Address Objections
The OpCo Debtors have told the Court that each of the reservations
of rights and objections lodged against the OpCo Disclosure
Statement either has been resolved, has been addressed with
additional disclosure, or presents issues more properly addressed
in connection with confirmation of the Amended OpCo Plan.
Lee Kaufman, Esq., at Richards, Layton & Finger, P.A, in
Wilmington, Delaware, summarized the status of the OpCo
Disclosure Statement objections:
Objector Debtors' Response Status
-------- ----------------- ------
Mr. Yung, et al. Additional disclosure Resolved
Icahn Additional disclosure; Resolved
Any remaining concerns are
better tackled at
confirmation
Wilmington Trust -- Contested
Lenders Steering Certain issues regarding Resolved
Committee the OpCo Plan are not
objections to the
Disclosure Statement
Creditors Additional disclosure --
Committee
The OpCo Debtors have assured the Court they will continue to work
with Wilmington Trust on mutually agreeable language. They noted
though that the Indenture Trustee's proposed changes to the OpCo
Plan are confirmation issues.
With respect to the Lenders Steering Committee, Mr. Kaufman said
that the OpCo Disclosure Statement concerns are resolved. The
parties are continuing to work to resolve other concerns.
The OpCo Debtors have provided the Creditors Committee with a
draft for the Amended Disclosure Statement and are hopeful the
additional disclosure resolves the concerns. The OpCo Debtors
and the Creditors Committee are attempting to resolve other
remaining issues, Mr. Kaufman had told the Court.
A full-text copy of the OpCo Debtors' Omnibus Reply to the
Disclosure Statement Objections is available at no charge at:
http://bankrupt.com/misc/Tropi_OpCoDebtorsDSobjStatus.pdf
As reported in today's Troubled Company Reporter, the OpCo Debtors
have amended their Plan and Disclosure Statement to reflect the
appropriate changes and revisions.
The OpCo Debtors have asked the Court to overrule the Disclosure
Statement objections to the extent not otherwise resolved; and
approve their Amended Disclosure Statement as fully compliant
with Section 1125 of the Bankruptcy Code and all other applicable
provisions of the Bankruptcy Code.
LandCo Debtors Address Objections
The LandCo Debtors aver that each of the objections to the LandCo
Disclosure Statement either have been resolved, have been
addressed with additional disclosure, or presents issues more
properly addressed in connection with confirmation of the Amended
LandCo Plan.
Objector Debtors' Response Status
-------- ----------------- ------
Mr. Yung, et al. Additional disclosure Resolved
Wells Fargo Most, or all, the concerns
are confirmation issues
Icahn Additional disclosure; Resolved
Any remaining issues are
to confirmation
Creditors Additional disclosure
Committee
Onex Most, or all, the concerns are
confirmation issues
Mr. Kaufman had told the Court that the LandCo Debtors have
provided the Creditors Committee with a draft Amended Disclosure
Statement and are hopeful that the additional disclosure resolves
the Committee's concerns. The LandCo Debtors, he adds, are
working with the Creditors Committee in an attempt to resolve the
other issues.
A full-text copy of the LandCo Debtors' Omnibus Reply to the
Disclosure Statement Objections is available at no charge at:
http://bankrupt.com/misc/Tropi_LandCoDebtorsDSobjStatus.pdf
As reported in today's Troubled Company Reporter, the LandCo
Debtors have amended their Plan and Disclosure Statement to
reflect the appropriate changes and revisions.
The LandCo Debtors have asked the Court to overrule the Disclosure
Statement Objections to the extent not otherwise resolved, and
approve the Amended LandCo Disclosure Statement as fully
compliant with Section 1125 and all other Bankruptcy Code
provisions.
Justice Stein's Statement
Counsel of Adamar New Jersey Trustee and Conservator Justice
Stein, Karen M. McKinley, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, P.A., in Wilmington, Delaware, has said the OpCo Debtors
have 'put the proverbial cart before the horse.' She said "the
OpCo Debtors have no legal ability or authority to direct how the
creditors' claims of the New Jersey Entities should be satisfied."
The NJ Commission is set to consider Justice Stein's request to
extend the sale period and to initiate a Section 363 sale of the
Tropicana Atlantic City and related assets. Because it is
unclear how the NJ Commission will rule, Ms. McKinley said that
the OpCo Disclosure Statement should accurately reflect the
uncertainty and at the very least, state that:
(1) the NJ Commission may not allow Justice Stein to join in
the OpCo Plan;
(2) in that event the proposed treatment of the New Jersey
Entities' creditors under the OpCo Plan will have no
bearing on the ultimate distribution to those creditors in
the New Jersey Entities' bankruptcy proceedings; and
(3) the New Jersey Entities' entry into and emergence from
Chapter 11 may not coincide with the OpCo Debtors' desire
to confirm the OpCo Plan by mid-April 2009 and therefore,
it may not be feasible for the OpCo Debtors to accomplish
their goal to confirm a jointly proposed plan.
Ms. McKinley added that Justice Stein and his professionals have
been in discussions with the Lenders Steering Committee and
Credit Suisse, the agent for the Prepetition Lenders, regarding a
mutually acceptable approach for the disposition of the Tropicana
Atlantic City, subject to the rulings of the NJ Commission.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Wants Solicitation Deadline Moved to July
------------------------------------------------------------------
Tropicana Entertainment LLC and 26 other debtors; and Tropicana
Las Vegas Holdings, LLC, and six debtor affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend their
exclusive period to solicit plan acceptances, to afford them a
full and fair "first shot" to have their plans of reorganization
confirmed, to the earlier of:
(a) 10 business days after the date of the entry of orders
either granting or denying confirmation of the separate
plans of reorganization of the OpCo Debtors and the LandCo
Debtors; or
(b) July 17, 2009.
The current Exclusive Solicitation Period deadline is March 13,
2009.
According to Lee E. Kaufman, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, since the entry of the First
Exclusivity Extension Order, the Debtors and their advisors have
devoted considerable time:
(a) developing a comprehensive, bottom-up, property-by-
property business plan;
(b) transitioning their operations lock, stock, and barrel
from Kentucky to Las Vegas;
(c) recruiting a seasoned team of senior executive;
(d) developing and implementing dozens of new initiatives at
each of their properties;
(e) marketing the Evansville Assets and preparing for a
contested sale hearing and, ultimately, reaching a
settlement regarding the termination of the sale; and
(f) seeking licensure in New Jersey and a return of the
Atlantic City Assets.
Most significantly, the Debtors note that they have drafted and
negotiated the terms of, and ultimately filed on January 8, 2009,
two plans of reorganization and their accompanying disclosure
statements.
The Debtors say they intend to spend the additional time they are
seeking to work diligently towards resolving objections to,
soliciting acceptances for, and securing confirmation of the
plans of reorganization, and emerging from bankruptcy as stronger
enterprises. The Debtors aver that they will also use the
additional time to continue pursuing their relicensing efforts
for certain casinos in their portfolio.
The Debtors cannot begin to solicit acceptances for their Plans
until the Disclosure Statements are approved. The hearing for
the approval of the Disclosure Statements is March 5, 2009.
"This leaves the Debtors with roughly one week of their Exclusive
Solicitation Period to solicit acceptances for their Plans. This
cannot realistically be done in that short period," Mr. Kaufman
points out.
As reported in today's Troubled Company Reporter, the OpCo and
LandCo Debtors have amended their Plan and Disclosure Statement to
reflect the appropriate changes and revisions.
Given the challenging circumstances facing the Debtors, the broad
interests of the Debtors' constituent groups, and the additional
regulatory challenges that still must be addressed, the best
interest of the Debtors, their estates, and their creditors would
be well served by extending the Debtors' Exclusive Solicitation
Period, Mr. Kaufman asserts.
Atlantic City Casino Sale Moved to March 18
Separately, the New Jersey Casino Control Commission has extended
the deadline for the sale of the Tropicana Atlantic City Casino to
March 18, 2009, according to NBC40.net.
Gilbert L. Brooks, representing secured lenders who hold a
$1,400,000,000 mortgage on Tropicana, said that Carl Icahn, the
former owner of Sands Casino Hotel, is among parties who are
willing to make an offer as a stalking horse, newsday.com
reported. pressofAtlanticCity.com quoted Mr. Brooks as telling
the NJ Commission that "[Mr.] Icahn and the others are preparing
to make an offer for Tropicana using part of all of the mortgage
for a 'credit bid.'"
Sean Mack, an attorney with Justice Stein's law firm, indicated
that Cordish Co. "remains in the running despite that fact that
it missed a Feb. 2 deadline to reach agreement to buy Tropicana,"
PAC related. "[David S. Cordish's] telling us he's still
interested," PAC quoted Mr. Mack as saying.
PAC noted that Mr. Icahn's group "could ignite a bidding war for
Tropicana" when Justice Stein takes Tropicana Atlantic City into
bankruptcy for an auction, possibly in March 2009.
Scott C. Butera, Tropicana Entertainment, LLC's chief executive
officer, supports Mr. Icahn's group as a possible buyer of
Tropicana Atlantic City, stating that "he would like to see Icahn
acquire the Atlantic City casino and combine it with Tropicana
Entertainment's other gaming properties in Nevada, Mississippi,
Louisiana and Indiana," PAC reported.
Mr. Butera, however, remains "enthusiastic" about Tropicana's
attempt to regain ownership of the Tropicana Atlantic City.
Tropicana has filed a petition with the NJ Commission to regain
control of the casino. No hearing date has been set for the
petition, according to PAC.
According to a report by LoHud.com, Tropicana Atlantic City is
expected to file for bankruptcy in late March 2009. LoHud.com
noted that it has been 14 months since Tropicana Atlantic City's
former owners, Tropicana Entertainment, et al., was stripped of
their casino license.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TRUMP INT'L: Lenders & Developer Agree to Temporarily Stop Suit
---------------------------------------------------------------
Alex Frangos at The Wall Street Journal reports that developer
Donald Trump and his lenders -- led by Deutsche Bank AG -- have
agreed to temporarily suspend litigation on the Trump
International Hotel & Tower project in Chicago.
WSJ relates that Mr. Trump filed a lawsuit against the lenders in
November 2008, demanding that Deutsche Bank extend a construction
loan. Mr. Trump, says WSJ, claimed that the financial crisis
triggered the "force majeure" clause in his loan. Force majeure
usually applies to unforeseen circumstances like war or natural
disasters. WSJ notes that Deutsche Bank countersued and demanded
that Mr. Trump make good on a $40 million personal guarantee he
made to complete the building.
According to WSJ, the agreement reached between the lenders and
Mr. Trump gives them at least 90 days to arrive at a settlement
over the project. WSJ says that the project's sales are behind
what is needed to pay back a $640 million first mortgage
construction loan. Court documents states that sales of 339
hotel rooms and 486 condominium units were below original
estimates and the project's current projected revenue is short by
almost $100 million needed to pay off the senior first mortgage
loan.
WSJ relates that the agreement reached with lenders also gives Mr.
Trump tie to finish construction without fear of foreclosure. WSJ
states that it isn't clear what role Mr. Trump will play in Trump
International once it is completed.
Trump International, says WSJ, also owes about $360 million on a
mezzanine loan that was originated by Fortress Investment Group
LLC. Court documents say that Mr. Trump put $77 million of his
own equity into the tower.
Trump International Hotel & Tower is a 92-story development of
Donald Trump.
VALHI INC: Fitch Junks Issuer Default Rating from 'B-'
------------------------------------------------------
Fitch Ratings has downgraded Valhi, Inc.'s Issuer Default Rating
to 'CCC' from 'B-'.
In addition, Fitch has downgraded the rating on Valhi's
$85 million senior secured revolving credit facility to 'CCC/RR4'
from 'B-/RR4'. The facility is secured by a pledge of 20 million
shares of Kronos Worldwide, Inc. common stock owned by Valhi.
Borrowings are limited to a third of the market value of the
pledged shares.
Fitch has also downgraded Kronos International, Inc.'s (Kronos
International) ratings:
-- IDR to 'CCC' from 'B';
-- Senior secured revolving credit facility to 'B+/RR1' from
'BB/RR1';
-- Senior secured notes to 'CCC/RR4' from 'B/RR4'.
The Rating Outlooks for both Valhi and Kronos International are
Negative.
The rating actions reflect unfavorable trends in the Titanium
Dioxide industry. Industry weakness beginning in the second half
of 2007 accelerated in 2008 and resulted in higher debt and lower
liquidity at the subsidiary level and higher debt and a halt to
KRO dividends. Free cash generation has been negative given
higher capital requirements and declining earnings in 2008. Fitch
expects persistent high leverage at Kronos International. At the
Valhi parent level, the company will be borrowing under its
revolver to fund capital at its waste disposal subsidiary and
dividends.
The Negative Outlooks reflect Fitch's view that trading conditions
could deteriorate further and that leverage could increase. In
particular, Fitch expects Kronos International's total debt to
operating EBITDA will exceed 7 times (x) over the next 12 to 18
months.
The ratings reflect tight liquidity at Kronos International, KRO's
strong market position in the TiO2 industry (fifth largest
globally) and Valhi's reliance on dividends from KRO and NL
Industries Inc. NL, itself a holding company, relies on dividends
from KRO and CompX International, Inc.
Kronos International is Europe's second largest producer of TiO2
pigments. The company is a wholly owned subsidiary of KRO, a
holding company which has additional ownership interests in
certain North American TiO2 producers. TiO2 pigments are used in
paints, paper, plastics, fibers and ceramics.
Valhi is a holding company with direct and indirect ownership
stakes in NL, KRO, CIX (manufacturer of component products) and
Waste Control Specialists (provider of hazardous waste disposal
services).
VERASUN ENERGY: Seeks June 30 Extension of Plan Filing Deadline
---------------------------------------------------------------
Pursuant to Section 1121(d) of the Bankruptcy Code, VeraSun Energy
Corp. and its debtor-affiliates ask Judge Brendan Linehan Shannon
of the U.S. Bankruptcy Court for the District of Delaware to
extend:
(a) the period within which they have exclusive right to file
a plan of reorganization until June 30, 2009; and
(b) the period within which they have exclusive right to
solicit acceptances of that plan until August 31, 2009.
Section 1121(b) of the Bankruptcy Code provides for an initial
120-day period after the Petition Date within which the Debtors
have the exclusive right to file a plan of reorganization in
their cases. Section 1121(c) further provides for an initial
180-day period after the Petition Date within which the Debtors
have the exclusive right to solicit and obtain acceptances of a
plan filed by the Debtors during the Plan Period.
The Exclusive Periods are intended to afford Chapter 11 debtors a
full and fair opportunity to negotiate and propose a plan without
the disruption that might be caused by the filing of competing
plans by non-debtor parties. Based on the statutory timelines to
file and solicit a reorganization plan contained in Section 1121,
the Debtors' exclusive plan filing period expired on February 28,
2009, and the exclusive solicitation period will expire on
April 29.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, in
Wilmington, Delaware, asserts that extension of the Debtors'
exclusive periods is warranted. The extension, he contends, will
allow the Debtors' proposed sale process to run its course and
give the Debtors the opportunity to formulate, propose, and
solicit a plan, without the disruption of their efforts that
might be caused by the filing of competing plans by non-Debtor
parties.
Mr. Chehi adds that the Debtors' Chapter 11 cases are extensive
and complex and that the sheer size and complexity of the
bankruptcy cases alone justify an extension of the Exclusive
Periods.
Furthermore, Mr. Chehi relates that the negotiations over
financing for each of the Debtors' four distinct segments, each
with its own prepetition secured credit facility, occupied much
of the Debtors' focus during the first three months of the
Chapter 11 Cases. Since the Petition Date, the Debtors have
negotiated and obtained final orders approving nine separate DIP
Financings at their various segments. In addition to the DIP
Financing, the Debtors also negotiated and received the Court's
approval for the consensual use of cash collateral.
Mr. Chehi, moreover, tells the Court that the proposed sale of
all or a portion of the assets of each of the Segments add yet
another layer of complexity.
Accordingly, the Debtors believe that the requested extension of
the Exclusive Periods is a reasonable request given the time
required to effectuate the sale process and in light of the scope
of their operations and the complexity of their capital
structure.
If the request is granted, the Debtors ask that the extension
will be without prejudice to their right to seek further
extensions or any party-in-interest's right to seek reduction of
the Exclusive Periods for cause.
By application of Delaware Local Rule 9006-2, the Debtors'
exclusive period is automatically extended until March 5, 2009,
when the Court will convene a hearing on the extension request.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000).
VERASUN ENERGY: Seeks May 29 Extension of Lease Decision Period
---------------------------------------------------------------
Section 365(d)(4)(A) of the Bankruptcy Code provides that an
unexpired lease of nonresidential real property under which the
debtor is the lessee will be deemed rejected, and the trustee
will immediately surrender that non-residential real property to
the lessor, if the trustee does not assume or reject the
unexpired lease by the earlier of (i) the date that is 120 days
after the Petition Date, or (ii) the date of the entry of an
order confirming a plan of reorganization.
Pursuant to Section 365(d)(4), the Debtors' period for assuming
or rejecting unexpired leases of nonresidential real property
expired on February 28, 2009.
However, Section 363(d)(4)(B) states that the court may extend
the lease decision period, prior to the expiration of the 120-day
period, for 90 days on the motion of the trustee or lessor for
cause.
The Debtors have filed a bidding procedures and sale motion
seeking approval of a process to evaluate the sale of their
assets. The motion sets an expedited sale timeline. The
Debtors, Mark S. Chehi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court
for the District of Delaware, have a few leases but those leases
are subject to the sales process.
The Debtors believe that those Leases are potentially valuable
assets of their estates that purchasers may wish to acquire.
However, the Debtors will not know which Leases any potential
purchaser may be interested in acquiring until the sale process
runs its course, Mr. Chehi tells the Court.
In addition, Mr. Chehi says if certain Leases are not acquired
during the sales process, the Debtors will need time to evaluate
the Leases, along with any other remaining assets, to determine
whether, in their business judgment, to assume or reject the
Leases. Those Leases may be necessary for any remaining
operations or for the wind down of the estates.
For these reasons, the Debtors ask the Court to extend their
lease decision period through and including May 29, 2009.
Mr. Chehi notes that the Debtors are current on all of their
postpetition rent obligations of leases and intend to remain
current going forward. Thus, the relief the Debtors are asking
for will not prejudice landlords under the remaining unexpired
leases.
By application of Delaware Local Rule 9006-2, the Debtors' lease
decision period is automatically extended until March 5, 2009,
when the Court will convene a hearing on the extension request.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000).
VERASUN ENERGY: Has Until Tomorrow to Pick Bidder for Other Assets
------------------------------------------------------------------
Pursuant to the bidding procedures related to their plan to sell
substantially all assets, VeraSun Energy Corp. and its affiliates
have until March 2, 2009, to select a qualified bid of a qualified
bidder to be an additional stalking horse bid for the Assets other
than the VSE Assets.
The Debtors, in consultation with the Committee, the lenders
under the ASA DIP Facility, and the lenders under the AgStar DIP
Facility, notify the Court that they are extending the Additional
Stalking Horse Date to March 6, 2009, with respect to the ASA
Segment, the US BioEnergy Segment and the Marion Segment.
As reported by the Troubled Company Reporter on February 9, 2009,
the Debtors have signed an agreement with Valero Energy
Corporation to sell substantially all of their assets relating to
the VeraSun production facilities in Aurora, South Dakota; Charles
City, Fort Dodge, and Hartley, Iowa; and Welcome, Minnesota; and a
development site in Reynolds, Indiana. Valero has offered to
acquire certain assets for $280,000,000, plus the value of
inventory and certain pre-paid expenses, subject to certain
customary adjustments.
While the Debtors have received expressions of interest with
respect to assets other than those that are the subject of the
proposed Valero transaction, the Debtors have not yet negotiated a
definitive agreement to sell any other facilities.
Other than the extension of the Additional Stalking Horse Date,
the procedures for the designation of Additional Stalking Horse
Bidders and the Bidding Procedures have not been modified and the
Debtors and all parties-in-interest reserve all rights with
respect to the designation of any Additional Stalking Horse
Bidder.
As reported by the TCR on February 24, 2009, the Court approved
the Bidding Procedures and the Assumption and Assignment
Procedures. The Debtors will conduct an auction with respect to
all or some of the Assets on March 16, 2009, at 11:00 a.m., at One
Rodney Square, P.O. Box 636, in Wilmington, Delaware.
The Court also approved the VSE Break-Up Fee and the Stalking
Horse Expense Reimbursement subject to the provisions in the
revised proposed order.
The Court approved all other provisions contained in the revised
proposed order.
VERASUN BANKRUPTCY NEWS relates that the Official Committee of
Unsecured Creditors and several parties-in-interest attempted to
block approval of the bidding procedures and sale of the Debtors'
VSE Assets to Valero and asked the Court to modify the bidding
procedures and certain provisions of the sale agreement.
The other objectors are:
* Dougherty Funding LLC,
* ICM, Inc.,
* Liberty Mutual Insurance Company,
* Northern Natural Gas Company,
* A&B Process Systems Corp., and
* White County, Indiana.
The Creditors' Committee argued that:
-- the proposed bidding procedures do not operate to encourage
a fair and competitive bidding process and are likely to
discourage interested third parties from participating in
an auction for the Debtors' assets;
-- the proposed break-up fee is inappropriate given that
courts generally limit break-up fees to one to three
percent of the proposed purchase price, and the proposed
break-up fee to Valero is more than three percent of the
cash consideration for the sale of the VSE Assets; and
-- the proposed bidding procedures contain inappropriate
triggers for the payment of the break-up fee.
Dougherty Funding, as secured postpetition lender to Debtors US
Bio Marion LLC and ASA Albion LLC, said the bidding procedures
should be modified to, among other things, protect each secured
creditor's right to credit bid and ensure that no Debtor will be
required to sacrifice its recovery for the benefit of another
Debtor. Pursuant to the Proposed Bidding Procedures, any secured
lender's credit bid must, "provide for payment in cash at closing
and the assumption of the administrative expense claims of the
Debtors that own the Assets to be acquired."
Dougherty also objects to the Bid Procedures to the extent that
it allows the Debtors to enter into agreements with additional
stalking horse bidders without the senior Secured Lender's
consent as required by Section 363(f) of the Bankruptcy Code.
ICM, an engineering firm who has entered into several contracts
with the Debtors for services at the plants subject to the
proposed sale, said the Debtors did not identify the Dyer and
Methanator Contracts as executory. ICM said the Debtors'
assumption of each of the ICM Contracts pursuant to the sale is
essential and required to lawfully use the ICM technology and
obtain warranty and other benefits accruing to the Debtors under
the contracts.
Liberty Mutual Insurance Company issued numerous surety bonds in
favor of various state and federal regulatory authorities at the
Debtors' request. In conjunction with the issuance of the Bonds,
the Debtors executed a general agreement of indemnity under which
the Debtors agreed to indemnify Liberty Mutual from all losses,
costs and damages. Additionally, each Debtor that is a principal
under a bond owes a common law obligation to exonerate and
indemnify Liberty, as surety under a bond. Liberty wants the
Debtors to segregate sale proceeds to the extent the proceeds
relate to assets or obligations underlying Liberty's Bonds.
Northern Natural Gas Company said the Bidding Procedures deprive
counterparties of their ability to evaluate and object to a
buyer's adequate assurance of future performance.
A&B Process said the Debtors seek to sell their assets free and
clear of A&B's possessory lien without providing adequate
protection to A&B.
White County, in Indiana, said its contracts with the Debtors are
not assignable because they constitute in significant part
agreements to make financial accommodations specific to the
Debtors and the development plans of the Debtors for the Property.
Debtor VeraSun Reynolds LLC owns a certain parcel of real
property in White County. The Property is one of the assets
which the Debtors seek to sell.
Debtors Address Objections
According to VERASUN BANKRUPTCY NEWS, the Debtors told the Court
that, given their liquidity concerns as well as the declining
state of the ethanol industry and the market generally, a prompt
Sale of their Assets is the best way to maximize value for the
benefit of their estates and creditors.
Davis Lee Wright, Esq., at Skadden, Arps, Slate, Meager & Flom,
LLP, in Wilmington, Delaware, told the Court that the Break-Up Fee
and Expense Reimbursement were essential components necessary to
secure Valero's willingness to become a stalking horse bidder.
He said while Valero initially insisted on bid protections with an
aggregate value of $14,000,000, the Debtors were able to reduce
the aggregate amount of the bid protections to $11,000,000.
The Debtors, Mr. Wright said, are confident that entering into the
VSE APA will maximize the value of the Assets for the Debtors,
their creditors, and their estates.
The Debtors, through a certification of counsel, submitted with
the Court a revised proposed order to accommodate the objections
and requests filed by parties-in-interest.
The Court will convene a hearing on March 18, 2009, at 12:00
p.m., to consider approval of the sale of the VSE Assets to
Valero if no competing bids are timely received by March 13.
Objections, if any, to any Sale must be filed and served on
counsel for the Debtors by March 9 at 4:00 p.m.
A blacklined version of the Revised Proposed Order is available
for free at http://bankrupt.com/misc/VerSBidProcORD.pdf
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000).
VERSACOLD INTERNATIONAL: Moody's Cuts Default Rating to 'Caa3'
--------------------------------------------------------------
Moody's Investors Service has downgraded Versacold International
Corporation's Probability of Default rating to Caa3 from Caa1 and
lowered its Corporate Family rating to Caa2 from Caa1. The rating
action concludes the review initiated Dec 22, 2008, and reflects
Moody's concerns that, for the foreseeable future, Versacold's
overall liquidity profile is likely to remain constrained by
external factors over which it lacks the ability to control giving
rise to an elevated risk of default.
The incremental risk for a default to occur has caused Moody's to
reconsider its assumptions regarding the expected recovery value
of Versacold's assets. In view of the company's relatively
favorable business profile, which benefits from expected stability
through the business cycle, Moody's believes its value should
remain relatively favorable in a distress scenario. Therefore,
the recovery rate, which influences the Corporate Family rating,
has been favorably adjusted to 60% from 50% previously. This
contributes to a one notch downgrade in the company's CFR versus
the two notch downgrade of the company's PDR. In conjunction with
the rating action, Versacold's first lien senior secured rating
was affirmed at B2 and its second lien senior secured rating was
lowered to Caa3 from Caa2. The outlook is negative.
Downgrades:
Issuer: Versacold International Corporation
-- Corporate Family Rating, Downgraded to Caa2 from Caa1
-- Probability of Default Rating, Downgraded to Caa3 from Caa1
-- Second Lien Senior Secured Bank Credit Facility, Downgraded
to Caa3 (LGD4, 52%) from Caa2 (LGD4, 68%)
Affirmations:
Issuer: Versacold International Corporation
-- First Lien Senior Secured Bank Credit Facility, at B2 (LGD2,
15% from LGD 2, 24%)
Outlook Actions:
Issuer: Versacold International Corporation
-- Outlook, Changed To Negative From Rating Under Review
Moody's liquidity concerns at Versacold stem from ongoing
pressures at both its subsidiary, Versacold Logistics Canada Inc.
(formerly Eimskip Atlas Canada Inc.) and ultimate parent, Hf
Eimskipafelag Islands. In the case of VLCI, that entity (through
its subsidiary, Versacold USA Inc) has been unable to negotiate a
sufficient extension to its term loan to alleviate refinancing
risk (now due March 31, 2009, from February 27, 2009 previously).
While VLCI is an unrestricted subsidiary within Versacold's
banking group and VLCI's debt is non-recourse to Versacold, should
a default at VLCI occur, Versacold's lenders would have the
ability to call a default under cross default language of the
agreements.
There is also the potential for HFEI to exert indirect, albeit
considerable pressure on Versacold's liquidity profile should an
event of default occur at HFEI, which could trigger an event of
default under the terms of Versacold's credit agreement. HFEI is
currently attempting to negotiate the sale of Versacold to ease
its own leverage and liquidity constraints. While HFEI expects to
complete the sale in early 2009, Moody's believes this timing is
likely to be challenged by the ongoing dislocation of the capital
markets. In the event that the sale does not occur within the
near term, Moody's believes it is possible that HFEI could seek
creditor protection, which would likely be considered an event of
default under the terms of that entity's lending agreements.
Apart from the potential for external liquidity pressures to
arise, Moody's notes that Versacold's liquidity profile benefits
from a relatively favorable debt maturity profile of its own
obligations. Additionally, Moody's expects that Versacold's
leading market position within the public refrigeration warehouse
business and its integral nature with a diverse group of customers
is likely to enable its free cash flow streams to remain slightly
positive through the economic cycle. Nonetheless, the company's
consolidated adjusted leverage is high (approaching 7x) and it
lacks the financial flexibility to deal with the above noted
liquidity pressures. The negative outlook captures the potential
that further downward rating movement could occur should liquidity
pressures at either VLCI or HFEI result in a default being called
under Versacold's loan agreements.
Moody's last rating action on Versacold occurred December 22, 2008
when the company's Corporate Family rating was lowered to Caa1
from B3 and ratings were placed under review for further possible
downgrade.
Versacold International Corporation is headquartered in Canada and
is a leading supplier of temperature controlled warehousing and
logistic services to food producers, processors, as well as
wholesale and retail distributors. Annual revenues are
approximately C$1.2 billion.
VILLAGE HOMES: Wants Plan Filing Deadline Extended to July 3
------------------------------------------------------------
Village Homes of Colorado Inc., has asked the U.S. Bankruptcy
Court for the District of Colorado to extend its exclusive period
to file a Chapter 11 plan until July 3.
Bloomberg reported that the Debtor, in its request for the
extension, cited lack of financing and disagreements among lenders
over collateral. Village Homes said that it needs more time to
negotiate with lenders over their claims, including rights to
finished and unfinished homes.
Village Homes' deadline to file its turnaround plan is March 6,
and absent an extension, parties-in-interest may file competing
plans.
According to Bloomberg's Bill Rochelle, the lender with the
largest secured claim is an affiliate of Guaranty Financial
Group Inc. owed $86 million. GMAC LLC and its subsidiary
Residential Capital LLC are owed $36.1 million.
Headquartered in Greenwood Village, Colorado, Village Homes of
Colorado Inc. develops and builds residential communities. The
Debtor filed for bankruptcy on November 6, 2008 (Bankr. D. Colo.
Case No. 08-27714). The Hon. A. Bruce Campbell presides over the
case. Garry R. Appel, Esq., at Appel Lucas, in Denver, Colorado,
acts as the Debtor's bankruptcy counsel. When it filed for
bankruptcy, the Debtor reported $103,898,087 in total assets, and
$138,414,003 in total debts.
VIRGIN MOBILE: Posts $4.4 Million Fourth Quarter 2008 Net Loss
--------------------------------------------------------------
Virgin Mobile USA, Inc., reported its financial and operational
results for the fourth quarter and full year ended December 31,
2008.
"Our fourth quarter results reflect the positive benefits of the
strategic initiatives executed throughout the year," said Dan
Schulman, Chief Executive Officer of Virgin Mobile USA. "The
popularity of the Company's postpaid and renewed hybrid service
plans, launched midyear, contributed to growth in ARPU in the
second half of the year while reducing churn. The operational
efficiencies we've implemented have allowed us to grow Adjusted
EBITDA in the fourth quarter by 84% year over year, excluding
transition and restructuring costs from the acquisition of Helio
and the Company's outsourcing of IT services to IBM."
Mr. Schulman continued, "During difficult economic times, we
believe that the Company's service plans are even more relevant to
consumers searching for value and flexibility. The Company's full
year results reflect the strength of the Company's offer and the
resilience of the Company's business model in this environment.
In a challenging year, we produced $115.2 million in Adjusted
EBITDA excluding transition and restructuring costs, and $25.7
million in free cash flow, reflecting strong growth in both
metrics. The intrinsic value of the Company's service plans,
combined with the Company's lean cost structure and the Company's
continued ability to innovate, position us for continued growth in
these metrics in 2009."
Overview and Basis of Presentation
Financial results for Helio are included in Virgin Mobile USA's
results beginning on August 22, 2008. The financial results for
the fourth quarter and full year ended December 31, 2007,
presented in this release reflect the retroactive consolidation of
Virgin Mobile USA, Inc., Virgin Mobile USA, L.P., and Bluebottle
USA Investments L.P. Virgin Mobile USA, Inc., is a holding
company formed for the purpose of an initial public offering, or
IPO, that was completed on October 16, 2007. Virgin Mobile USA is
also presenting its earnings per share for the fourth quarter and
full year ended December 31, 2007, on a pro forma basis which
reflects the shares issued in the IPO as outstanding for all of
2007.
During the fourth quarter of 2008, Virgin Mobile USA's net service
revenue was $326.7 million, an increase of 10% versus the same
period last year. Virgin Mobile USA's net service revenue in the
year ended December 31, 2008, was $1.2 billion, consistent with
net service revenue in the year ended December 31, 2007. Net
service revenue for 2008 benefited from the acquisition of Helio
as well as the accelerating adoption of the Company's higher value
hybrid plans, particularly in the second half of the year.
Adjusted EBITDA in the fourth quarter of 2008 was $12.6 million.
Adjusted EBITDA excluding transition and restructuring costs in
the fourth quarter of 2008 was $18.0 million, an increase of 84%
compared to Adjusted EBITDA of $9.8 million in the fourth quarter
of 2007. Transition and restructuring costs in the fourth quarter
of 2008 included approximately $2.9 million in transition costs
associated with the acquisition of Helio and approximately $2.5
million of restructuring costs associated with the outsourcing of
IT services to IBM and costs related to a headcount reduction
announced in November 2008. Adjusted EBITDA margin was 3.9% in
the fourth quarter of 2008. Adjusted EBITDA margin excluding
transition and restructuring costs was 5.5% in the fourth quarter
of 2008, up from 3.3% in the fourth quarter of 2007. Virgin
Mobile USA continued to increase its profitability due to ongoing
operating cost efficiencies and the continued benefit from
favorable adjustments to the Company's network costs.
In the year ended December 31, 2008, Adjusted EBITDA was
$101.1 million.
Adjusted EBITDA excluding transition and restructuring costs in
the year ended December 31, 2008, was $115.2 million, an increase
of 16% year over year. Adjusted EBITDA margin in the year ended
December 31, 2008 was 8.2%.
Adjusted EBITDA margin excluding transition and restructuring
costs for the year was 9.3%, compared to 8.0% in the year ended
December 31, 2007.
Adjusted EBITDA margin excluding transition and restructuring
costs benefited from operational cost efficiencies implemented in
the second half of 2008, which are expected to produce continued
operational benefits in 2009.
Virgin Mobile USA's net loss for the quarter ended December 31,
2008 was ($4.4) million, compared to a net loss of
($14.7) million for the fourth quarter of 2007. Net income for
the year ended December 31, 2008 was $7.9 million compared to $4.2
million for the year ended December 31, 2007. Net income in 2008
was impacted by $2.4 million in minority interest expense and $5.6
million incremental expense related to the Company's tax
receivable agreements, neither of which existed in the prior year
period. Virgin Mobile USA was not a taxpayer prior to its initial
public offering in October of 2007.
Adjusted diluted loss per share excluding amortization of
intangible assets and transition and restructuring costs was
($0.05) in the fourth quarter of 2008 compared to diluted loss per
share of ($0.30) for the fourth quarter of 2007. Pro forma
diluted earnings per share, which is adjusted to reflect the
shares issued in the IPO as outstanding for the entire period, was
($0.28) in the fourth quarter of 2007. Pro forma diluted loss per
share in the year ended December 31, 2007 was $0.06, compared with
diluted earnings per share excluding amortization of intangible
assets and transition and restructuring costs in the full year
2008 of $0.26, reflecting growth of over 300% from 2007.
Free cash flow totaled $25.7 million in the year ended
December 31, 2008, up 130% from $11.2 million in the year ended
December 31, 2007. The increase in free cash flow is a result of
the reduction throughout 2008 of Virgin Mobile USA's senior
secured loan and related interest expense payments as well as
ongoing cost efficiencies in Virgin Mobile USA's model. Capital
expenditures for the year ended December 31, 2008, were
$18.8 million, compared to $28.4 million for the year ended
December 31, 2007.
In 2008, Virgin Mobile USA acquired Helio and, in conjunction with
the acquisition, made changes to its capital structure which the
Company believes significantly improved its structure and outlook.
In the year ended December 31, 2008, Virgin Mobile USA reduced its
debt to $267 million from $324 million on December 31, 2007. Net
interest expense in the year ended December 31, 2008 was $30.7
million, down 42% from $53.4 million last year.
John Feehan, Chief Financial Officer of Virgin Mobile USA,
commented, "Our business model produced excellent profitability
and free cash flow in 2008, as a result of the Company's strong
operational discipline and focus on continuing improvement to the
Company's capital structure. With the improved liquidity from the
Company's equity partners to support the business, we are well-
positioned to continue to invest in the business as well as
produce growing free cash flow in 2009."
Key Metric Performance Review for the Fourth Quarter and Full Year
2008
Gross additions (or new Virgin Mobile USA customers who activated
their accounts) during the fourth quarter of 2008 totaled 960,421,
compared to gross customer additions of 957,541 in the fourth
quarter of 2007. Gross additions in the year ended December 31,
2008, were 3,305,857, down 2% from 3,384,460 in the full year
2007. The overall decrease in gross adds in 2008 was a result of
the negative gross add performance in the first half of the year
in part due to the economic impact on customer spending. This was
mostly offset by the implementation and success of the Company's
new service plans during the year. Hybrid plans in the fourth
quarter of 2008 accounted for 48% of Virgin Mobile USA's gross
adds.
The Company's cost per gross addition (CPGA) for the fourth
quarter of 2008 was $101.93, compared to CPGA of $120.68 in the
fourth quarter of 2007. CPGA in the year ended December 31, 2008
was $108.68, compared to $111.66 for full year 2007. Virgin
Mobile USA CPGA in the fourth quarter and in the year ended
December 31, 2008 benefited from improving handset costs and a
reduction in marketing spend following investments in its new
service plans during the first half of the year.
The Company's cash cost per user (CCPU) for the fourth quarter of
2008 was $13.99 compared with $11.77 in the fourth quarter of
2007. CCPU in the fourth quarter of 2008 was higher due to the
first full quarter impact of the acquisition of Helio. CCPU in
the fourth quarter of 2008 was also impacted by $5.4 million in
transition and restructuring costs, which did not exist in the
fourth quarter of 2007. Despite these items and the ongoing
growth of hybrid plans in Virgin Mobile USA's customer base, CCPU
in the year ended December 31, 2008, was $12.74 versus $13.05 in
2007, reflecting planned improvements to Virgin Mobile USA's
operational expenses in its core business.
Average monthly customer turnover, or churn for the three months
ended December 31, 2008, was 4.8%, a 30-basis point improvement
from the same period in 2007. Customer churn in the fourth
quarter of 2008 benefited from the success of the Company's
monthly hybrid plans, which provide incentives for customers to
top up within 30 days, as well as other new customer lifetime
management initiatives implemented in the second half of the year.
Churn in the year ended December 31, 2008 was 5.2%, compared with
4.9% in the year ended December 31, 2007. As of December 31,
2008, the Company had approximately 5.4 million customers, an
increase of 6% over December 31, 2007, reflecting, in part, the
acquisition of Helio.
Average revenue per user (ARPU) for the fourth quarter of 2008 was
$21.14, reflecting a 4% increase from ARPU of $20.36 in the fourth
quarter of 2007, and an increase of 3% from the third quarter of
2008. ARPU in the year ended December 31, 2008, was $20.30, a 4%
decline compared to $21.24 in the year ended December 31, 2007.
ARPU in the fourth quarter and full year ended December 31, 2007
benefited from the launch of the Company's revised hybrid plans in
the second quarter of 2008. The fourth quarter of 2008 marked the
second consecutive quarter of sequential growth in ARPU from
$19.49 in the second quarter and was the result of the impact of
the Company's recent acquisition of Helio as well as continued
adoption of the new hybrid plans.
Outlook
Virgin Mobile USA believes that the current economic environment
is causing a shift in the consumer mindset to a focus on value,
which may make its products and services more relevant to
consumers in 2009. The current economic environment is
unpredictable and presents challenges for all businesses. Within
this environment, Virgin Mobile USA will continue to focus on high
quality hybrid customer additions and strong cash flow.
Virgin Mobile USA's management believes the operational
initiatives it has put in place in recent quarters, including new
service plans, improved handsets, increased distribution and
operational cost savings, will enable it to continue to produce
positive business trends and position the Company for growth in
Adjusted EBITDA and free cash flow in 2009. These metrics will be
management's core focus for the year.
About Virgin Mobile USA Inc.
Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE:
VM) -- http://www.virginmobileusa.com/-- is a provider of
wireless, pay-as-you-go communications services without annual
contracts. Voice pricing plans range from monthly options with
unlimited nights and weekends to by-the-minute offers, allowing
consumers to adjust how and what they pay according to their
needs. Virgin Mobiles full slate of handsets, including the Wild
Card, Super Slice and Cyclops, are available at top retailers in
more than 35,000 locations nationwide and online, with Top-Up
cards available at more than 130,000 locations.
Virgin Mobile USA Inc.'s balance sheet at December 31, 2008,
showed total assets of $367,068,000 and total liabilities of
$670,951,000. The company reported $355,630,000 in total
stockholders' deficit.
W.R. GRACE: Credit Crisis May Delay $1-Bil. Bankruptcy Exit Loan
----------------------------------------------------------------
W.R. Grace & Co. in its 2008 annual report submitted to the
Securities and Exchange Commission on March 2 said that it
recorded a net income of $121.5 million on net sales of
$3.31 billion, an increase from net income of $88.8 million on net
sales of $3.11 billion in 2007.
Bloomberg News, however, noticed a disclosure by W.R. Grace in the
"company risks" section of the same report that current capital-
market conditions may preclude obtaining the $1 billion loan it
will need for emerging from Chapter 11 reorganization.
W.R. Grace on February 27, 2009, filed an amended joint plan of
reorganization that is supported by the official committee of
equity security holders, the official committee of asbestos
personal injury claimants, and the legal representative of future
asbestos personal injury claimants. The Joint Plan is designed to
address all pending and future asbestos-related claims and all
other prepetition claims against the Company.
W.R. Grace noted that "the effectiveness of the Joint Plan is
subject to the fulfillment of numerous conditions that may not
ultimately be fulfilled." One of these conditions is that raising
sufficient funds to pay certain claims in cash.
"We anticipate that we will need approximately $1.0 billion in new
financing to fund the Joint Plan," the Company explained. "Until
the current crisis in the global credit markets more fully abates,
traditional debt financing may be unavailable to us on acceptable
terms. If we are unable to obtain the necessary financing on
acceptable terms, our emergence from Chapter 11 may be delayed."
W.R. Grace added that while the Joint Plan has gained support from
key parties, other parties-in-interest in its Chapter 11 case have
objected to several provisions of the Joint Plan and others may
object in the future. "As a result, it is possible that the Joint
Plan will not be confirmed by the bankruptcy court or the district
court or become effective," the Company acknowledged.
W.R. Grace also stated that it has lost its exclusive rights to
file a reorganization plan. "No party currently has exclusive
rights to propose a plan of reorganization and solicit votes
thereon, so any party-in-interest can propose a competing plan of
reorganization at any time. Therefore, until an ultimate plan of
reorganization is confirmed and effective, the interests of the
holders of Grace common stock remain subject to substantial
dilution or cancellation. Accordingly, the value of Grace common
stock is highly speculative and any investment in Grace common
stock poses a high degree of risk."
Aside from potential problems in obtaining exit financing, W.R.
Grace may be forced to pay over $1 billion in restitution if it's
convicted of criminal charges that it polluted the mining town of
Libby, Montana, Bloomberg said. A loss in the Libby trial, which
began February 23, could cost the Company $1.28 billion in fines
and restitution, Bloomberg said, citing government lawyers.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
W&T OFFSHORE: Moody's Downgrades Corporate Family Rating to 'B3'
----------------------------------------------------------------
Moody's Investors Service downgraded W&T Offshore, Inc.'s
Corporate Family Rating and Probability of Default Rating to B3
from B2. Moody's also downgraded the company's senior secured
bank facility rating to Ba3 (LGD2, 26%) from Ba2 (LGD2, 22%), and
the $450 million senior unsecured notes rating to Caa1 (LGD5, 79%)
from B3 (LGD5, 76%). The Speculative Grade Liquidity rating for
W&T was lowered to SGL-3 from SGL-2. The outlook is negative.
"The downgrade reflects W&T's escalating leverage and weak reserve
replacement metrics," commented Pete Speer, Moody's Vice-
President. "We also expect the company's liquidity to
significantly tighten over 2009 due to lower commodity prices and
reduced availability under its revolving credit facility."
W&T's leverage as measured against average daily production has
steadily increased over the course of 2008, reflecting both the
adverse effects of Hurricane Gustav and Ike, but also weak capital
productivity. Even after adjusting for deferred production due to
the hurricanes, the underlying production trend is declining and
leverage is rising. The company's all sources finding and
development costs were $80/boe in 2008, excluding the negative
revisions due to lower commodity prices and hurricane losses. The
$867 million (excluding capitalized interest) of costs incurred in
2008 only replaced 67% of production.
The company's cash balance declined by $328 million during the
fourth quarter of 2008, as production interruptions, declining oil
and natural gas prices, working capital changes and still heavy
capital expenditures combined to rapidly consume cash. W&T
entered 2009 with $358 million in cash and has substantially
reduced its capital expenditure budget for 2009 in order to be
able to fund its investments and dividends through operating cash
flows and cash on hand. The company has no hedges in place so it
is vulnerable to further declines in commodity prices.
The reduced cash balance, an expected borrowing base reduction and
covenant concerns led us to reduce the SGL rating to SGL-3. W&T
has an undrawn $500 million borrowing base revolving credit
facility that is likely to be significantly decreased in the
upcoming borrowing base redetermination due to the declines in
proved reserve volumes and commodity prices. In addition, the
company's debt covenant headroom will significantly tighten over
the course of the year. W&T could violate its 2.5x Debt/EBITDA
covenant later this year if commodity prices remained at their
current levels or decline further, and/or the company is not able
to restore its production to expected levels. The negative
outlook reflects Moody's concerns regarding covenant compliance
and the negative fundamental trends.
The $500 million revolving credit facility combined with the $203
million term loan is enough senior secured debt to result in a
double notching of the $450 million senior unsecured notes to Caa2
under Moody's Loss Given Default Methodology. However, Moody's
has decided to maintain the single notching of the notes rating
beneath the CFR based on the expected reduction in the borrowing
base in the redetermination to be completed in the April 2009.
Should the revolving credit facility end up larger than expected
or if more senior secured debt is added to the capital structure
then the bond ratings could be downgraded.
The last rating action was on April 22, 2008, when Moody's
assigned the SGL-2 rating to W&T.
W&T Offshore is an independent exploration and production company
headquartered in Houston, Texas.
WENDY'S INTERNATIONAL: Moody's Reviews B1 Ratings on Arby's Deal
----------------------------------------------------------------
Moody's Investors Service placed the ratings of Wendy's
International, Inc., on review for possible downgrade following an
announcement by its parent company -- Wendy's/Arby's Group, Inc. -
- that it intends to combine the credit facilities of Wendy's and
Arby's Restaurant Group, Inc., under a single credit agreement.
Wendy's and Arby's are wholly-owned subsidiaries of Wendy's/Arby's
Group, Inc., and are currently financed on a standalone basis with
separate credit agreements.
These ratings were placed on review for possible downgrade:
* Corporate Family Rating - B1
* Probability of Default Rating - B1
* $200 million senior secured revolving credit facility expiring
2011 - Ba1 (LGD1, 9%)
* $100 million 7% senior unsecured notes due 2025 -- B2 (LGD4,
63%)
* $225 million 6.2% senior unsecured notes due 2014 -- B2 (LGD4,
63%)
* $200 million 6.25% senior unsecured notes due 2011 -- B2 (LGD4,
63%)
The review for downgrade reflects Moody's concern that the
proposed financial structure will directly link Wendy's to its
financially weaker sister company -- Arby's. Arby's has a B2
Corporate Family Rating and negative rating outlook. Although
both Arby's and Wendy's have been impacted by lower consumer
spending trends, Arby's operating results have been negatively
affected to a greater degree.
Moody's review will focus on the incremental financial burden to
Wendy's that may result from the proposed combination of its
credit agreement with Arby's. Wendy's ratings could be lowered if
a formal obligation is established between the two subsidiaries
that places an additional strain on Wendy's financial profile.
The most recent rating action on Wendy's occurred on October 29,
2008 when Moody's lowered the the company's Corporate Family
Rating to B1 from Ba3 and assigned a stable outlook.
Wendy's International, Inc., is a wholly-owned subsidiary of
Wendy's / Arby's Group Inc. The company generates annual revenues
of approximately $2.4 billion.
WHITNEY LAKE: Can Employ Krawcheck Law Firm as Special Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of South Carolina
granted Whitney Lake, LLC, permission to employ the services of
Kenneth C. Krawcheck, Esq. of Krawcheck Law Firm, LLC, as special
counsel.
As reported in the Troubled Company Reporter on Jan. 15, 2009, Mr.
Krawcheck's duties would include investigating and prosecuting
objections to claims, avoidance actions, and the recovery of
assets.
Mr. Krawcheck bills at $250 per hour, and his firm's paralegals
bill at $100 per hour.
Mr. Krawcheck assured the Court that neither he nor the firm holds
an interest adverse to the Debtor or its estate, and he and the
firm are "disinterested" persons as defined in Sec. 101(14) of the
Bankruptcy Code.
Based in Johns Island, South Carolina, Whitney Lake, LLC --
http://www.whitneylake.com/-- is a townhouse subdivision
developer. The company filed for Chapter 11 relief on Sept. 18,
2008 (Bankr. D. S.C. Case No. 08-05729). Kevin Campbell, Esq., at
Campbell Law Firm, P.A. represents the Debtor as counsel. When
the company filed for protection from its creditors, it listed
total assets of $22,807,654, and total debts of $21,197,259.
WHITNEY LAKE: U.S. Trustee Wants Plan Outline Scrapped
------------------------------------------------------
W. Clarkson McDow, Jr., the U.S. Trustee for Region 4, objects to
the disclosure statement of Whitney Lake, LLC, which was filed
with the U.S. Bankruptcy Court for the District of South Carolina
on Dec. 22, 2008.
As reported in the Troubled Company Reporter on Jan. 15, 2009,
there are four main components to the Debtor's Financial Plan.
First, complete and sell the existing inventory of townhomes.
Second, use the cash proceeds in part to pay creditors, pay
administrative claims, and fund future construction that will
provide future sales and cash. Third, redesign the master plan to
reflect current market conditions and the relative demand for
single family housing versus townhomes and condominiums. Finally,
merge Whitney Lake, LLC with Whitney Lake Tract B-1, LLC to
consolidate certain assets and simplify practices common to both
entities, as well as to enhance the plan of reorganization.
A full-text copy of the Debtor's Plan of Reorganization, dated
Dec. 22, 2008, is available for free at:
http://bankrupt.com/misc/WhitneyLakePlan.pdf
A full-text copy of the Disclosure Statement, dated Dec. 22, 2008,
explaining the Debtor's Plan of Reorganization is available for
free at http://bankrupt.com/misc/WhitneyLakeDS.pdf
The U.S. Trustee informed the Court that the disclosure statement
does not contain "adequate information" as that term is defined in
Sec. 1125(a)(1) of the Bankruptcy Code in that:
1. The disclosure statement does not provide sufficient
financial information to enable creditors to make an
informed decision regarding acceptance or rejection of the
plan of reorganization. The disclosure statement should
explain the factors which support its rosy financial
projections.
2. The liquidation analysis provided in the disclosure
statement is inadequate. It is insufficient to merely state
conclusively that the Debtor believes that creditors will
receive more under the plan than they would under a
chapter 7 liquidation. The disclosure statement asserts
that there is very little risk to creditors. It is
difficult to understand how this could be so with the
economy in the state that it is in.
3. Neither the disclosure statement nor the plan of
reorganization filed by the Debtor provide unsecured
creditors with sufficient information for them to determine
the amount or the intervals of payments they will receive
under the plan.
4. The disclosure statement fails to adequately explain the
relationship of the Debtor's affiliated and related
entities, its insiders, and the debts owed to those
entities.
5. The disclosure statement appears to refer to the wrong year
in the second full paragraph on page 4.
6. Section G is titled "Unsecured Liabilities." However, the
first sentence of that section states that what follows is a
list of priority claimants. It is unclear whether these are
general unsecured claims or priority claims.
7. The Debtor's monthly operating report for the month of
November, filed on December 22, 2008, reflects that the
Debtor paid $4,800 for an appraisal during November.
However, the disclosure statement makes no reference to an
appraisal, and the debtor does not appear to have sought or
obtained Court authority to employ or compensate an
appraiser.
In view of the foregoing, the U.S. Trustee asks the Court to deny
approval of the disclosure statement.
Based in Johns Island, South Carolina, Whitney Lake, LLC --
http://www.whitneylake.com/-- is a townhouse subdivision
developer. The company filed for Chapter 11 relief on Sept. 18,
2008 (Bankr. D. S.C. Case No. 08-05729). Kevin Campbell, Esq., at
Campbell Law Firm, P.A. represents the Debtor as counsel.
When the company filed for protection from its creditors, it
listed total assets of $22,807,654, and total debts of
$21,197,259.
WL HOMES: Can Hire Omni Management as Claims and Noticing Agent
---------------------------------------------------------------
WL Homes LLC and its debtor-affiliates obtained authority from the
United States Bankruptcy Court for the District of Delaware to
employ Omni Management Group, LLC, as claims, balloting, noticing
and administrative agent. The Court also appointed Omni as agent
of the Bankruptcy Court.
Omni is expected to assist the Debtors in managing and addressing
the administrative matters that will likely to arise in their
Chapter 11 cases. In addition, Omni will also act as solicitation
agent with respect to, inter alia, the mailing of a disclosure
statement, the plan and related ballots, and maintaining and
tallying ballots in connection with the voting on the plan.
Robert. L. Berger, a member of Omni, fka Robert L. Berger &
Associates, Inc., told the Court that Omni's professional hourly
rates are:
Senior Consultants $195 - $295
Consultants and Project Specialists $75 - $140
Programmers $130 - $200
Clerical Support $35 - $65
Mr. Berger disclosed that in the 90 days prior to the petition
date, Omni received payments equaling $75,000, including a $50,000
retainer, and incurred fees and expenses for $25,000. There are
no amounts owed to Omni as of the petition date.
Mr. Berger assures the Court that Omni is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy Code.
About WL Homes LLC
Headquartered in Irvine, California, WL Homes LLC dba John Laing
Homes -- sells and builds houses. The Debtor and five of its
affiliates filed for Chapter 11 protection on February 19, 2009
(Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors' in their restructuring efforts. When the
Debtors sought protection from their creditors, they listed assets
of More than $1 billion, and debts between
$500 million to $1 billion.
WL HOMES: Wants Bradley D. Sharp as Chief Restructuring Officer
---------------------------------------------------------------
WL Homes LLC and its debtor-affiliates seek authority from the
United States Bankruptcy Court for the District of Delaware to
employ Development Specialists, Inc., to perform restructuring
services for the Debtors and Bradley D. Sharp as chief
restructuring officer.
Mr. Sharp, a senior vice president with DSI, will assist the
Debtors in their operations and manage the Debtors' employees and
external professional who are assisting the Debtors in their
restructuring.
Mr. Sharp will also provide assistance to the Debtors with respect
to the management of the overall restructuring process and
developing an overall exit strategy for the Debtors in their
Chapter 11 cases.
In addition, Clare M. Pierce of DSI has been appointed vice
president corporate recovery and J. Antonio Prada of DSI has been
appointed assistant vice president of corporate recovery. The
board of directors of the Debtors will have direct oversight and
control over Mr. Sharp as CRO and the other DSI employees
appointed as officers in these cases.
Specifically, these employees will:
a) assist in the prosecution of the Debtors' Chapter 11 cases,
including developing business plans and cash flow
forecasts;
b) assist in the potential development, proposal, negotiation
and confirmation of any plan of reorganization;
c) assist in the development and execution of plans to dispose
of any non-core assets;
d) assist in the preparation of reports, and communications
with the Debtors' lender and constituencies;
e) develop and implement various strategic alternatives as
approved by the board of managers;
f) assist in the day-to-day management of the operations of
the Debtors' business; and
g) assist with other matters as may be requested that fall
within DSI's expertise and that are mutually agreeable with
the board of managers.
DSI professionals working on these cases and their hourly rates
are:
Bradley D. Sharp $495
Clare M. Pierce $425
J. Antonio Prada $220
Mr. Sharp tells the Court that during the 90 day period prior to
the petition date, DSI's fees and expenses relating to services
rendered by DSI were approximately $440,000. The Debtors have
satisfied all those fees and expenses through regular payments of
DSI's invoices.
Mr. Sharp adds that as of the petition date, DSI held a $500,000
retainer.
Mr. Sharp assures the Court that DSI is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy Code.
About WL Homes LLC
Headquartered in Irvine, California, WL Homes LLC dba John Laing
Homes -- sells and builds houses. The Debtor and five of its
affiliates filed for Chapter 11 protection on February 19, 2009
(Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors' in their restructuring efforts. When the
Debtors sought protection from their creditors, they listed assets
of More than $1 billion, and debts between
$500 million to $1 billion.
WOOD STRUCTURE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Wood Structures, Inc.
20 Pomerleau Street
Biddeford, ME 04005
Bankruptcy Case No.: 09-20245
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Wood Assonet Corporation 09-20246
Type of Business: The Debtors are general building contractor.
Chapter 11 Petition Date: March 3, 2009
Court: District of Maine (Portland)
Debtors' Counsel: D. Sam Anderson, Esq.
sanderson@bernsteinshur.com
Bernstein Shur Sawyer & Nelson
100 Middle St., West Tower
Portland, ME 04101
Tel: (207) 774-1200
Fax: (207) 774-1127
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtors did not file a list of 20 largest unsecured creditors.
The petition was signed by Frank Paul, president.
WORKFLOW MANAGEMENT: Moody's Affirms at Caa3 in Corrected Release
-----------------------------------------------------------------
Substitute fourth sentence of the second paragraph with these:
"Following an amendment to the forbearance agreement, the company
made a payment of a scheduled second lien interest payment on
February 27, 2009 and subsequently prepaid its scheduled March 31,
2009 term loan amortization payment on March 2, 2009."
Revised release is:
Moody's Investors Service has affirmed Workflow Management, Inc.'s
Caa3 CFR and changed the rating outlook to negative from
developing. Details of the rating action are outlined below.
Ratings affirmed:
* Corporate Family rating - Caa3
* Probability of Default rating - Caa3
* Senior secured first lien revolving credit facility, due 2010 -
- Caa1, LGD2, 28%
* Senior secured first lien term loan facility, due 2011 -- Caa1,
LGD2, 28%
* Senior secured second lien term loan facility, due 2011 -- Ca,
LGD5, 74%
The rating outlook has been revised to negative from developing.
The change in rating outlook to negative from developing follows
the February 28, 2009 expiration date of a planned merger
agreement executed in 2008 between Workflow and Enterprise
Acquisition Corporation and management's disclosure that it is no
longer actively pursuing merger talks with EAC. Management had
previously considered that the successful conclusion of the merger
agreement would have enabled the company to reduce its debt by
approximately $220 million; however, the expiration of the merger
agreement effectively rules out the prospect of debt reduction
from this source, and hence the potential for some positive rating
bias as reflected in the former "developing" outlook related to
this prospective event only no longer exists.
On January 12, 2009, Workflow made payment of a December 31, 2008
scheduled term loan amortization payment, subject to the terms of
a forbearance agreement with its creditors. The company
subsequently effected payment of a January 30, 2009 scheduled
second lien interest payment, in part, from the proceeds of an
additional $2.2 million in loans extended by its primary owner
(Perseus Group) and its second lien agent bank (Silver Point).
The company used borrowed funds to make this payment as the
forbearance agreement (then in effect) precluded the use of cash
on hand to make payments to second lien lenders. Following an
amendment to the forbearance agreement, the company made a payment
of a scheduled second lien interest payment on
February 27, 2009, and subsequently prepaid its scheduled
March 31, 2009 term loan amortization payment on March 2, 2009.
Moody's does not consider that the company will be able to sustain
the funding requirements of its scheduled term loan amortization
during 2009 (approximately $7 million per quarter) without further
lender relief and/or funding from its owners or other parties.
Moody's considers that Workflow's lenders may be reluctant to
loosen financial covenants further and/or to extend the debt
repayment schedule without receiving substantially higher pricing
(the latter placing further strain upon the company's already-
tight liquidity profile).
Workflow's Caa3 Corporate Family rating reflects a correspondingly
weak liquidity profile, which is exacerbated by the company's
heavy debt burden and high financial leverage, its recent reliance
upon sponsor equity to meet near-term funding needs, and Moody's
expectation that lenders may receive no more than average recovery
in a distress scenario. The Caa3 PDR specifically incorporates a
high probability of near-term covenant and payment default, and
the possibility that management may be forced to consider a
complete restructuring of the company's balance sheet.
The last rating action occurred on October 31, 2008, when Moody's
downgraded Workflow's Corporate Family rating to Caa3 from Caa1
and changed the rating outlook to developing. Additional
research, including the most recent Credit Opinion, can be found
on www.moodys.com.
Workflow's ratings were assigned by evaluating factors Moody's
believe are relevant to the credit profile of the issuer, such as
i) the business risk and the competitive position of the company
versus others within its industry, ii) the capital structure and
financial risk of the company over the near-to-intermediate term,
and iv) management track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of Workflow's core industry and Workflow's ratings are
believed to be comparable to those of other issuer of similar
credit risk.
Headquartered in Stamford, Connecticut, Workflow Management, Inc.
is a leading provider of managed print and promotional production
and fulfillment solutions sources. For the LTM period ended
September 30, 2008, the company reported sales of approximately
$973 million.
* Bankruptcy Filings Surged 37% in February Over Prior Year
-----------------------------------------------------------
Bankruptcy filings in the U.S. rose 37% in February from a year
earlier. Total filings for individuals and companies rose to more
than 103,000, Bloomberg News reported, citing data compiled by
Automated Access to Court Electronic Records, a service of Jupiter
ESources LLC in Oklahoma City. According to the data, commercial
filings rose to 6,303, up 47% from the same month a year earlier,
the group said.
Bill Rochelle and Bob Willis of Bloomberg said that more Americans
are seeking protection from their creditors as the economy sank
into its deepest recession in at least a quarter century.
"It's not surprising that more people are declaring bankruptcy as
the U.S. is going through one of the deepest recessions since the
1930s," said Sal Guatieri, a senior economist at BMO Capital
Markets in Toronto. "A lot of people are losing their homes, their
jobs and their wealth."
Mr. Rochelle notes that:
-- faltering consumer demand has precipitated recent Chapter 11
filings by retailers such as Everything But Water LLC, the
largest U.S. retailer of women's swimwear, and Ritz Camera
Centers Inc., the largest chain of camera stores.
-- a pullback in newspaper advertising brought on filings in
late February by the parent of the Philadelphia Inquirer and
by Journal Register Co. and its 20 daily newspapers and 159
nondaily publications.
As for the newspaper industry, before Philadelphia Newspapers and
JRC succumbed to bankruptcy, Star Tribune Company, which has the
highest daily circulation in the State of Minnesota, and 15th
largest daily newspaper in the United States, filed for bankruptcy
January 15 as its revenues couldn't keep up with its debt load.
Tribune Co., which own leading papers, including the Los Angeles
Times and Chicago Tribune, etc., having collective paid
circulation totaling 2.2 million copies daily, petitioned for
bankruptcy in December, noting that significant decline in
newspaper advertising revenue industry-wide. A smaller-sized
publisher, Doubledown Media, which sells magazines for Wall Street
bankers and traders, sent its business to Chapter 7 liquidation on
February 25
As for retailers, Circuit City Stores, which sells consumer
electronics in 567 stores, in January abandoned its plans to keep
its business intact, two months into its Chapter 11 case. The
company opted to liquidate after it failed to find a buyer for a
going-concern transaction. Goody's LLC returned to Chapter 11 in
January to liquidate despite cleaning up its balance sheet in a
bankruptcy completed three months before. Steve & Barry's and
Tweeter have encountered the same fate as Goody's.
According to data compiled by the Troubled Company Reporter, five
companies disclosing assets and debts of over $1 billion apiece
filed for Chapter 11 in February, compared to four in January.
PETITION (In Millions)
COMPANY DATE ASSETS DEBTS
------- -------- ------ -----
Lyondell Chemical Co. 1/06/09 $27,177 $27,345
Tronox 1/12/09 $1,614 $1,237
Nortel Networks 1/14/09 $11,609 $11,793
Smurfit-Stone Container Corp. 1/26/09 $7,450 $5,582
Spectrum Brands Inc. 2/03/09 $2,247 $3,275
Aleris International, Inc. 2/12/09 $4,168 $3,978
Trump Entertainment Resorts 2/17/09 $2,056 $1,738
BearingPoint Inc. 2/18/09 $1,763 $2,232
Qimonda Richmond LLC 2/20/09 >$1,000 >$1,000
* Pending Home Sales Down but Housing Affordability at Record
-------------------------------------------------------------
Pending home sales declined on the heels of a weakening economy
and with some buyers waiting for clarity on housing stimulus
provisions, according to the National Association of Realtors(R).
The Pending Home Sales Index, a forward-looking indicator based on
contracts signed in January, fell 7.7% to 80.4 from a downwardly
revised reading of 87.1 in December, and is 6.4%% below January
2008 when it was 85.9. The index is at the lowest level since
tracking began in 2001, when the index value was set at 100.
Lawrence Yun, NAR chief economist, said the downturn in the
economy also weighed heavily on the data. "Even with many serious
potential home buyers on the sidelines waiting for passage of the
stimulus bill, job losses and weak consumer confidence were a
natural drag on home sales," he said. "We expect similarly soft
home sales in the near term, but buyers are expected to respond to
much improved affordability conditions and from the $8,000 first-
time buyer tax credit."
NAR President Charles McMillan, a broker with Coldwell Banker
Residential Brokerage in Dallas-Fort Worth, said it's ironic with
the weak housing market that affordability conditions have
improved dramatically. "Housing affordability is at a record high
- the buying power of a typical family has risen significantly,"
he said. "With the drop in interest rates, a median-income family
can afford a home costing $20,000 more than a year ago for the
same monthly mortgage payment. With the strong housing stimulus,
we are hopeful inventory will get trimmed and which will help
prices stabilize in many areas by the end of this year."
NAR's Housing Affordability Index rose 13.6 percentage points in
January to 166.8, a new record high. The HAI, a broad index of
affordability using consistent values and assumptions over time,
shows that the relationship between home prices, mortgage interest
rates and family income is the most favorable since tracking began
in 1970.
The HAI indicates a median-income family, earning $59,800, could
afford a home costing $283,400 in January with a 20% downpayment,
assuming 25% of gross income is devoted to mortgage principal and
interest; affordability conditions for first-time buyers with the
same income and small downpayments are roughly 80% of that amount.
A year ago, the typical family could afford a home costing
$263,300.
Mr. Yun added, "Conditions have been aligning very favorably for
home buyers with the exception of consumer confidence. But I am
hopeful that sales will turn around by late spring and early
summer because history suggests that home sales can rise even in
times of job losses when housing affordability rises."
* NewOak Capital Appoints Candice Nonas Managing Director
---------------------------------------------------------
NewOak Capital announced on March 4 a partnership with Fundamental
Credit Capital Partners (FCCP), with its founder Candice Workman
Nonas named Managing Director of NewOak Capital to help market the
advisory, asset-management and capital markets platform.
"Ms. Nonas will be instrumental in aligning the issues and
interests of our clients with her focus and efforts developing and
being defined in Washington, D.C," says Ron D'Vari, Co-Founder and
CEO of NewOak Capital. "She will also focus on our efforts with
pension funds, endowments and other institutional investors."
"We are very impressed with Candice and what she's been able to
accomplish in a relatively short period of time with Fundamental
Credit Capital Partners," says James Frischling, Co-Founder and
President of NewOak Capital. "Candice is a highly energetic,
experienced and dedicated professional. We look forward to growing
the FCCP/NewOak Capital relationship."
Since founding her business early in 2008, Ms. Nonas has built an
impressive network that will be well served by the combined
capabilities of FCCP and NewOak Capital. "With her extensive
history in mortgage credit and risk management at Moody's, West
LB, Barclays Capital and most recently at Fortis Investments, she
brings tremendous structured finance knowledge and experience to
the table," adds Ron D'Vari. "Candice also has a history in
fundraising and development for higher education so she
understands the challenges and needs of institutional investors."
Mrs. Nonas has BA from Clark University in Worcester, MA and a MA
from Columbia University in New York.
About NewOak Capital
NewOak Capital is an advisory, asset management, and capital
markets firm organized to serve institutions in response to
challenges arising from the global credit markets. It provides
analysis, valuation, restructuring, risk transfer, and management
solutions and services to financial institutions and investors to
support their portfolio and corporate needs. NewOak Capital
employs 16 senior professionals with an average of 17 years of
experience in the fixed-income markets in addition to 17 junior
and support staff. It specializes in residential and commercial
mortgage loans and securities, REITs, asset-backed securities,
structured corporate securities (CSOs/CLOs), and distressed
financial companies with exposure. NewOak Capital employs a
differentiated framework, an integrated "see-through" analytics
platform, and a team of experienced professionals with diversified
investment and modeling expertise to provide client solutions.
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
---------------------------------------------------------------
In Re Invision Products LLC
Bankr. M.D. Fla. Case No. 09-02808
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/mab09-11415.pdf
In Re CLS Millennium, LLC
Bankr. N.D. Ga. Case No. 09-64657
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/ganb09-64657.pdf
In Re Bay - 1 Properties, Inc.
Bankr. N.D. Tex. Case No. 09-31102
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/txnb09-31102.pdf
In Re Benton Newton Advertising, Inc.
Bankr. N.D. Ala. Case No. 09-80744
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/alnb09-80744p.pdf
See http://bankrupt.com/misc/alnb09-80744c.pdf
In Re Chacon Organics Co. Ltd.
Bankr. D. Ariz. Case No. 09-03249
Chapter 11 Petition filed February 25, 2009
Filed as Pro Se
In Re 17742 Sherman Way, LLC
Bankr. C.D. Calif. Case No. 09-12038
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/cacb09-12038.pdf
In Re Lindsey, Stephen Junior
Lindsey, Patricia Lucille
Bankr. C.D. Calif. Case No. 09-11551
Chapter 11 Petition filed February 25, 2009
Filed as Pro Se
In Re Sardella, Patrick George
aka Pat Sardella
dba Country Club Auto Body
Bankr. C.D. Calif. Case No. 09-12027
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/cacb09-12027.pdf
In Re Butch's Main Street Automotive, Inc.
Bankr. D. Conn. Case No. 09-30419
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/ctb09-30419.pdf
In Re Cheong Chan, Ivy
Bankr. N.D. Ga. Case No. 09-20726
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/ganb09-20726.pdf
In Re Electronic Support Service, Inc.
aka ESS, Inc.
aka E.S.S., Inc.
Bankr. S.D. Ind. Case No. 09-01961
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/insb09-01961.pdf
In Re Moore, Brian C.
Bankr. D. Md. Case No. 09-13064
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/mdb09-13064.pdf
In Re Nelson Hydraulic Service, Inc.
Bankr. E.D. Mich. Case No. 09-30899
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/mieb09-30899.pdf
In Re Tronex Chemical Corporation
Bankr. E.D. Mich. Case No. 09-45222
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/mieb09-45222.pdf
In Re Bergenline Diagnostic Imaging, Inc.
Bankr. D. N.J. Case No. 09-14459
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/njb09-14459.pdf
In Re JCO LLC
Bankr. D. N.J. Case No. 09-14485
Chapter 11 Petition filed February 25, 2009
Filed as Pro Se
In Re LeBlanc, Eric Scott
dba Eric S. LeBlanc, DMD
Bankr. D. N.J. Case No. 09-14477
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/njb09-14477.pdf
In Re Blemel, Edward Gerald
dba Prodigious Automotive
Blemel, Karen Jean (Non-filing Spouse)
Bankr. D. N.M. Case No. 09-10742
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/nmb09-10742.pdf
In Re Gehler, Gilbert
Gehler, Renee
Bankr. S.D. N.Y. Case No. 09-22265
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/nysb09-22265.pdf
In Re S & O Investments, LLC
dba Volunteer Motorsport
Bankr. M.D. Tenn. Case No. 09-02083
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/tnmb09-02083.pdf
In Re Pleasant Grove Academy, Church of God in Christ
Bankr. N.D. Tex. Case No. 09-31116
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/txnb09-31116.pdf
In Re Bramblett & Gandara Investments, Inc.
Bankr. W.D. Tex. Case No. 09-30354
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/txnb09-30354p.pdf
See http://bankrupt.com/misc/txnb09-30354c.pdf
In Re First One, LLC
dba Tiki Seagrille and Bar
Bankr. E.D. Va. Case No. 09-70705
Chapter 11 Petition filed February 25, 2009
See http://bankrupt.com/misc/vaeb09-70705.pdf
In Re AJK Communications Inc.
Bankr. C.D. Calif. Case No. 09-14306
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/cacb09-14306.pdf
In Re Horizon Coach, Inc.
Bankr. M.D. Fla. Case No. 09-03450
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/flmb09-03450.pdf
In Re Gardiner, George Edward III
Bankr. W.D. La. Case No. 09-80233
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/lawb09-80233.pdf
In Re 44 Brushy Neck Ltd.
Bankr. E.D. N.Y. Case No. 09-71210
Chapter 11 Petition filed February 26, 2009
Filed as Pro Se
In Re Dukes, Donna Anne
Bankr. E.D. N.Y. Case No. 09-71230
Chapter 11 Petition filed February 26, 2009
Filed as Pro Se
In Re Heritage Rigging, Inc.
dba Trojan Riggers
Bankr. S.D. Ohio Case No. 09-30924
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/ohsb09-30924.pdf
In Re D.D's Catering Inc.
Bankr. W.D. Pa. Case No. 09-21252
Chapter 11 Petition filed February 26, 2009
Filed as Pro Se
In Re Gregory, Paul J.
Bankr. W.D. Pa. Case No. 09-70204
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/pawb09-70204.pdf
In Re Southhampton Investments, LLC
Bankr. W.D. Va. Case No. 09-70437
Chapter 11 Petition filed February 26, 2009
See http://bankrupt.com/misc/vawb09-70437.pdf
In Re Bragg, Spencer A.
Fry Bragg, Christa L.
Bankr. M.D. Ala. Case No. 09-10405
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/almb09-10405.pdf
In Re Label South, LLC
Bankr. N.D. Ala. Case No. 09-40554
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/alnb09-40554.pdf
In Re Gamboa Nicdao, Maria Elena
aka Ellen Gamboa Nicdao
dba The Financial Mall
Bankr. D. Alaska Case No. 09-00102
Chapter 11 Petition filed February 27, 2009
Filed as Pro Se
In Re Bella Famiglia, Inc.
dba Lugatti's Italian Grill
Bankr. C.D. Calif. Case No. 09-11720
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/cacb09-11720.pdf
In Re Inland Equity Holdings LLC
Bankr. C.D. Calif. Case No. 09-13696
Chapter 11 Petition filed February 28, 2009
See http://bankrupt.com/misc/cacb09-13696.pdf
In Re Jacqueline Yvonne Winter
Bankr. C.D. Calif. Case No. 09-14415
Chapter 11 Petition filed February 27, 2009
Filed as Pro Se
In Re Shreyas Hospitality, LLC
Bankr. C.D. Ill. Case No. 09-70523
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/ilcb09-70523.pdf
In Re Renken, Scott K.
Bankr. N.D. Ill. Case No. 09-06587
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/ilnb09-06587.pdf
In Re TML Transit Inc.
Bankr. N.D. Ill. Case No. 09-06552
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/ilnb09-06552p.pdf
See http://bankrupt.com/misc/ilnb09-06552c.pdf
In Re Blalock, Christopher Malone
Blalock, Sherry Jean
Bankr. N.D. Ind. Case No. 09-40110
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/innb09-40110.pdf
In Re Dinkins, Adrienne Y.
Bankr. D. Md. Case No. 09-13302
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/mdb09-13302.pdf
In Re Korman, Harvey J.
Korman, Susan C.
Bankr. D. Md. Case No. 09-13311
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/mdb09-13311.pdf
In Re Dwight's Plumbing, Inc.
Bankr. N.D. Miss. Case No. 09-10978
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/msnb09-10978.pdf
In Re BTB Holdings, Inc.
Bankr. D. Ore. Case No. 09-31237
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/orb09-31237.pdf
In Re Pakdhouse Group, Inc.
Bankr. D. S.C. Case No. 09-01463
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/scb09-01463.pdf
In Re Pat's Cookie Jar Restaurant and Baker Inc.
Bankr. W.D. Wash. Case No. 09-11777
Chapter 11 Petition filed February 27, 2009
See http://bankrupt.com/misc/wawb09-11777.pdf
In Re Suri # 02367 LLC
Bankr. D. N.J. Case No. 09-15012
Chapter 11 Petition filed February 28, 2009
See http://bankrupt.com/misc/njb09-15012.pdf
In Re Martin Luther King LLC
Bankr. D. N.J. Case No. 09-15013
Chapter 11 Petition filed February 28, 2009
See http://bankrupt.com/misc/njb09-15013.pdf
In Re McGinley Square, LLC
Bankr. D. N.J. Case No. 09-15014
Chapter 11 Petition filed February 28, 2009
See http://bankrupt.com/misc/njb09-15014.pdf
In Re Perez, Abel
Bankr. W.D. Tex. Case No. 09-50733
Chapter 11 Petition filed February 28, 2009
See http://bankrupt.com/misc/txwb09-50733.pdf
In Re Northeast Florida Entertainment, Inc.
dba Angel Square
Bankr. M.D. Fla. Case No. 09-01418
Chapter 11 Petition filed March 1, 2009
See http://bankrupt.com/misc/flmb09-01418.pdf
In Re Ensley, Edward Lee
dba Ensley Properties
Ray-Ensley, Lisa Dawn
dba Flying Pig Pottery
Bankr. M.D. Tenn. Case No. 09-02343
Chapter 11 Petition filed March 1, 2009
See http://bankrupt.com/misc/tnmb09-02343.pdf
In Re Scruggs, Larry N.
dba Advanced Properties & Investments
Bankr. E.D. Wisc. Case No. 09-22463
Chapter 11 Petition filed March 1, 2009
Filed as Pro Se
In Re Atul Bal Asram Inc.
Bankr. N.D. Calif. Case No. 09-30496
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re FastServe Mobility, Inc.
Bankr. N.D. Calif. Case No. 09-30498
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re Goldriver, LLC
Bankr. N.D. Calif. Case No. 09-41589
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/canb09-41589.pdf
In Re Chapp LLC
Bankr. D. Conn. Case No. 09-50367
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re McDaniel, Dave Craig
Bankr. M.D. Ga. Case No. 09-70351
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/gamb09-70351.pdf
In Re Spohn, Douglas Bruce
Bankr. N.D. Ga. Case No. 09-65391
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re Terra World Communications LLC
Bankr. D. Kans. Case No. 09-10491
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/ksb09-10491p.pdf
See http://bankrupt.com/misc/ksb09-10491c.pdf
In Re Wasmuth, Mark Allen
Wasmuth, Meridith Phillippi
Bankr. M.D. N.C. Case No. 09-80353
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re Set Free Deliverence Temple, Inc.
Bankr. W.D. Okla. Case No. 09-10955
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re Iachini Builders Inc.
Bankr. W.D. Pa. Case No. 09-70230
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/pawb09-70230.pdf
In Re Garren, Steven Maxell
dba Commercial Contracting Services
Bankr. E.D. Tenn. Case No. 09-11290
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/tneb09-11290p.pdf
See http://bankrupt.com/misc/tneb09-11290c.pdf
In Re Inara Convience, Inc.
dba Rosedale Texaco
dba Flip in Market
Bankr. N.D. Tex. Case No. 09-41242
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/txnb09-41242.pdf
In Re Best Transport Inc.
Bankr. W.D. Tex. Case No. 09-50779
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/txwb09-50779.pdf
In Re JLJ Construction Company, Inc.
Bankr. W.D. Tex. Case No. 09-10514
Chapter 11 Petition filed March 2, 2009
See http://bankrupt.com/misc/txwb09-10514.pdf
In Re BRM Family, LLC
Bankr. D. Utah Case No. 09-21687
Chapter 11 Petition filed March 2, 2009
Filed as Pro Se
In Re Clock Tower Operations, LLC
Bankr. D. Ariz. Case No. 09-03774
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/azb09-03774.pdf
In Re Womack, Steven Roy
dba Steve Womack Custom Trim & Tile
Bankr. W.D. Ark. Case No. 09-70997
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/arwb09-70997.pdf
In Re Hodgson, Thomas Phillip
aka Tom Hodgson
Bankr. C.D. Calif. Case No. 09-11790
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re MKM PNET LLC
Bankr. D. D.C. Case No. 09-00158
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/dcb09-00158.pdf
In Re Guardian Angel Christian Village, Inc.
Bankr. N.D. Ga. Case No. 09-10759
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/ganb09-10759.pdf
In Re Legend Daycare Center, Inc.
Bankr. N.D. Ga. Case No. 09-65634
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/ganb09-65634.pdf
In Re Norwood Investment Co, Inc.
Bankr. N.D. Ga. Case No. 09-65727
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re Soteria Construction Group, Inc.
fdba SCG
Bankr. N.D. Ga. Case No. 09-65733
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re Wetstone Branch, LLC
Bankr. N.D. Ga. Case No. 09-65736
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re Gillikin, William Shawn
Bankr. S.D. Ga. Case No. 09-60178
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/gasb09-60178.pdf
In Re Kirkpatrick, Carlton Russell
Kirkpatrick, Leigha Kristeen
Bankr. D. Nev. Case No. 09-12769
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/nvb09-12769.pdf
In Re Interieurs, Inc., F/K/A Props For Today, Inc.
Bankr. S.D. N.Y. Case No. 09-10955
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/nysb09-10955.pdf
In Re Paul King
dba P. King, Inc
dba U.T. Lounge, Inc.
Bankr. E.D. Pa. Case No. 09-11543
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re Old House, Inc.
dba Six-Pack & Sandwich
Bankr. W.D. Pa. Case No. 09-21447
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/pawb09-21447.pdf
In Re Satguruji, Inc.
Bankr. W.D. Tex. Case No. 09-50803
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/txwb09-50803.pdf
In Re Paul E. Peterson Investment Company
dba Paul E. Peterson Investment, Inc.
Bankr. D. Utah Case No. 09-21732
Chapter 11 Petition filed March 3, 2009
Filed as Pro Se
In Re T&T Building management Services, Inc.
Bankr. E.D. Va. Case No. 09-11570
Chapter 11 Petition filed March 3, 2009
See http://bankrupt.com/misc/vaeb09-11570.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, Christopher
G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2009. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***